Direct Marketing Association, The v. Huber
RESPONSE to 71 Amended MOTION to Exclude Testimony of Plaintiff's Expert Witnesses F. Curtis Barry, Thomas Adler, and Kevin Lane Keller filed by Plaintiff Direct Marketing Association, The. (Attachments: # 1 Deposition Excerpts Ex A)(Schaefer, Matthew)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Civil Action No. 10-CV-01546-REB-CBS
The Direct Marketing Association,
Roxy Huber, in her capacity as Executive
Director, Colorado Department of Revenue,
PLAINTIFF’S RESPONSE IN OPPOSITIONTO DEFENDANT’S AMENDED MOTION
TO EXCLUDE THE TESTIMONY OF PLAINTIFF’S EXPERT WITNESSES F. CURTIS
BARRY, THOMAS ADLER, AND KEVIN LANE KELLER [#71]
Plaintiff, the Direct Marketing Association (“the DMA”) submits this response in
opposition to the Defendant’s Amended Motion to Exclude the Testimony of
Plaintiff’s Expert Witnesses F. Curtis Barry, Thomas Adler, and Kevin Lane Keller
[#71] (“Amended Motion”), filed on December 20, 2010. After stipulating on December
3, 2010, to the admission of the reports and testimony of Plaintiff’s experts submitted in
connection with the Plaintiff’s motion for a preliminary injunction, the Defendant filed her
Amended Motion to exclude the testimony of the Plaintiff’s experts from a future, as-yetunscheduled trial on the merits. The Court should reject the Defendant’s Amended
Motion to Exclude, which in no way undermines the strength of the opinions offered by
the DMA’s experts or the DMA’s right to a preliminary injunction suspending the notice
and reporting requirements of H.B. 10-1193 (“the Act”).
I. THE DEFENDANT’S AMENDED MOTION SHOULD BE DENIED WITHOUT
PREJUDICE BECAUSE IT IS UNTIMELY ON ITS FACE AND IN VIOLATION
OF THE COURT’S PRACTICE STANDARDS.
As set forth in the Plaintiff’s Motion to Strike the Amended Motion, filed on by the
DMA on December 22, 2010 [#72], the Defendant’s Amended Motion is clearly untimely
as a motion filed in anticipation of trial, and also violates the Court’s Civil Practice
Standard V.G.1 for motions under Rule of Evidence 702. Indeed, as a purported pretrial motion, the Defendant’s Amended Motion to exclude is so pre-mature that a refusal
to act on the motion is the only viable action the Court can take on the Defendant’s
request at this time. The Plaintiff has not even offered the testimony of its experts for
admission at trial, and it is very probable that developments in the case will result in
certain additions and modifications in the opinions of Plaintiff’s experts before the time
of trial. See Plaintiff’s reply in support of its motion to strike filed January 6, 2011 [#74],
at 2 n.1. Therefore, the Defendant’s Amended Motion, if not stricken, should be denied
without prejudice for the reasons set forth in the Plaintiff’s Motion to Strike and
In a thinly-veiled attempt to use the Amended Motion to obtain additional briefing
in opposition to the Plaintiff’s motion for preliminary injunction, the Defendant asks the
Court to consider her arguments under Fed. R. Evid. 702 now in weighing the testimony
of the Plaintiff’s experts.
The Defendant’s critiques of the Plaintiff’s experts are,
however, baseless. Contrary to the Defendant’s assertions, the testimony of each of
the DMA’s experts is reliable, and strongly supports the DMA’s contention that its
members will suffer irreparable harm as a result of the Act.
II. THE DMA’S EXPERT, CURT BARRY, TESTIFIES RELIABLY WITH RESPECT
TO THE COSTS OF RETAILERS TO COMPLY WITH H.B. 10-1193, BASED
UPON MORE THAN TWENTY-FIVE YEARS OF EXPERIENCE WORKING
WITH DIRECT MARKETERS.
The DMA presents the testimony of Curt Barry, an expert in the systems and
operations of direct marketers, to testify concerning the costs affected retailers will incur
to comply with H.B. 10-1193. See DMA’s Reply in support of its motion for a preliminary
injunction [#56], Ex. A.1 (Barry Report). The core of Mr. Barry’s testimony is that
retailers affected by H.B. 10-1993 will incur significant costs in satisfying the notice and
reporting requirements of the Act and regulations. Barry Report, Statement of Opinions,
First Bullet (“Each of the three broad requirements of the law (Transactional Notice,
Annual Purchase Summary, and Annual Disclosure Report) will require retailers
affected by the statue and regulation to incur costs of compliance. In many cases, those
costs will be significant . . .”)
Far from being unreliable, Mr. Barry’s opinion that retailers will incur such costs
to comply with the law is uncontested. The Defendant has offered testimony from her
own expert, Dieter Gable, that the Act will impose between $2,500 and $6,000 in first
year compliance costs in response to the law, and additional costs on retailers each
year thereafter. See Defendant’s Response to motion for preliminary injunction [#50],
Ex. 6.1 (Gable Report) Statement of Opinions, ¶ H; DMA’s Reply [#56] Ex. C (Gable
Deposition) at 161:18 – 162:10. Under Tenth Circuit law, compliance cost of
approximately $1,000 per company, which represents only a fraction of the costs of
compliance projected by both Gable and Barry in this case, are sufficient to establish
irreparable harm for purposes of a preliminary injunction. Chamber of Commerce of the
United States v. Edmondson, 594 F.3d 742, 756, 771 (10th Cir. 2010).
Moreover, Mr. Barry reaches his conclusion that retailers will incur such
significant costs in a reliable manner – indeed, using the same fundamental
methodology employed by Mr. Gable. Both experts approached the task of determining
the costs of compliance by reviewing the requirements of the new law, analyzing the
steps retailers would be required to take to comply, and estimating the associated
expense. See generally, Barry Report;1 see also DMA Reply [#56] Ex. B (Barry
Deposition) at 218:20-25; Gable Report, Methodology Used in Formulating Opinions, ¶
H and Ex. A. In short, Mr. Barry’s core opinion, that retailers will incur meaningful costs
to comply with the Act and regulations is not only unquestionably reliable, but
completely consistent with the opinion of Defendant’s own expert. Such uncontested
costs of compliance alone establish a significant risk of irreparable harm to DMA
members as a result of the new law sufficient to support injunctive relief.
The DMA is not required, in order to satisfy the elements for an injunction, to
substantiate a precise measure of compliance costs, such as might be required to make
out a claim for damages suffered by its members (indeed, neither the DMA nor its
members would have the right to recover such costs from the State under the Eleventh
Amendment). Thus, any dispute between the parties regarding the relative magnitude
For example, Ex. B to Mr. Barry’s report details (at section 1.a) the 12 steps a retailer
will be required to take to isolate, extract and verify the data regarding Colorado purchasers it
will need to comply with the Act’s annual notice and reporting requirements.
of the compliance expense retailers will incur in order to comply with the Act is of only
secondary importance, at best, but Mr. Barry’s projections regarding the likely range of
such costs are reliable, as well. As Mr. Barry’s report makes clear, the law will affect a
wide variety of retailers ― as many as 10,000, by Gable’s estimate (Gable Dep. at
96:25 – 102:15) ― with different levels of sales, types of systems, kinds and ages of
technology, available personnel, and financial resources. As a result, there will be a
wide variation in the level of expense incurred by different retailers, necessitating
estimated ranges of costs based on a broad understanding of the businesses of
affected direct marketers. Barry Dep. at 219:1 – 220:18.
The facts and data Mr. Barry needed in order to provide an estimated range of
costs of compliance for all affected direct marketers are straightforward. 2 In order to
project the expenses associated with complying with the Act, Mr. Barry required
knowledge of: (1) the notice and reporting requirements of the new law; (2) the types of
systems and business operations of the companies (i.e., direct marketers) affected by
the law; and (3) the relative costs experienced by various direct marketers in developing
or modifying their systems. From his day-to-day work over the past 25 years, Mr. Barry
understands the business operations of direct marketers and of the costs to modify
Federal Rule of Evidence 702 provides:
“If scientific, technical, or other specialized knowledge will assist the trier of fact to
understand the evidence or to determine a fact in issue, a witness qualified as an expert by
knowledge, skill, experience, training, or education, may testify thereto in the form of an opinion
or otherwise, if (1) the testimony is based on sufficient facts or data, (2) the testimony is the
product of reliable principles and methods, and (3) the witness has applied the principles and
methods reliably to the facts of the case.”
them. Barry Report, Section II.B; Barry Dep. at 17:3 – 21:25; 214:9 – 218:5.3 Mr.
Barry’s resume details his extensive work with direct marketers and his knowledge of
their systems, operations, and costs of doing business. Barry Report, Curriculum Vitae.
Moreover, as revealed even in the sampling contained in his resume of the hundreds of
publications Mr. Barry has authored regarding the operations of direct marketers, he
has frequently evaluated and published information regarding such systems and costs.
Barry Report, Curriculum Vitae at 3-6 (e.g., “How to Reduce Labor Management Costs”
(Multichannel Merchant, Aug. 17 2010), “Sharpening Your E-Commerce Spend”
(Multichannel Merchant, Nov. 19, 2009), “Reducing Costs in the Contract Center” (Parts
1 and 2) (ROI, Dec. 2007 & Jan. 2008)).4
Although the Defendant repeatedly insists that Mr. Barry’s methodology was not
sufficiently “scientific,” the Defendant ignores the admonition of the Supreme Court in
Kumho Tire Co. v. Carmichael, 526 U.S. 137, 150 (1999) that “there are many different
kinds of experts, and many different kinds of expertise,” and that the reliability of an
expert’s testimony in a particular case may best be measured by the expert’s
Pages 214-20 of the Barry Dep. are submitted herewith. To minimize duplicative
submissions, other deposition citations are included in material submitted with the parties’ briefs
in connection with the motion for preliminary injunction or the Joint Additional Designation of
Deposition Testimony [#65].
So, for example, with regard to the changes in direct marketers systems and
operations necessary to comply with the law, Mr. Barry provided an estimate of the costs for
companies making such changes using their own personnel, as well as the costs of using
outside consultants and service providers. Barry Report, Sect. II.B.1.a. With regard to the
Annual Purchase Summaries to customers purchasing over $500, Mr. Barry provided a detailed
per piece estimate of the printing and mailing expense of $2 to $3 for each Annual Purchase
Summary the retailer is required to send. Id., Ex. B.1., § 1.c and Barry Dep. 231:1 – 233:3. All
of these estimates are based on the relevant facts and a reliable methodology of carefully
assessing the steps required in order to implement the particular requirements of the law.
“knowledge and experience,” rather than the application of some “scientific” method. In
this case, Mr. Barry is, based upon his particular knowledge and experience, ideally
suited to determine and explain what a broad class of affected direct marketers will
need to do in order to comply with H.B. 10-1193, and to estimate a correspondingly
broad range of costs to accomplish such tasks. Since starting his company, F. Curtis
Barry & Co., in 1985, Mr. Barry has handled hundreds of projects designing, developing,
and modifying the systems and operations of direct marketers to meet their specific
needs and requirements. Barry Report Section II.B.; Barry Dep. at 214:9 – 218:5. In
that regard, he has prepared or reviewed hundreds of cost proposals. Id.
The Defendant’s criticisms of Mr. Barry for not contacting specific businesses to
inquire about their costs fall flat because Mr. Barry was not attempting to determine the
costs for any particular business. Rather, the he was estimating the range of costs to
be incurred by businesses of many different sizes and capabilities.
criticism that Mr. Barry did not consult published sources to determine, for example,
labor rates, is misplaced. Mr. Barry has knowledge of such rates from his own work,
without needing to “look them up.” Because Mr. Barry has the relevant knowledge and
experience to determine what steps affected catalog and Internet retailers would need
to take to comply with the law, as well as the costs associated with implementing such
changes, his detailed explication and range of estimated costs are reliable. In any case,
because there is no dispute between the parties that affected retailers will incur
thousands of dollars of expense complying with the Act, the Defendant’s criticisms of
Mr. Barry’s calculations in no way limit the DMA’s right to injunctive relief.
III. THE SURVEY DESIGNED AND IMPLEMENTED BY TOM ADLER AND
RESOURCE SYSTEMS GROUP WAS CONDUCTED ACCORDING TO
ACCEPTED SURVEY METHODOLOGY, AND THE OPINIONS OFFERED BY
DR. ADLER BASED UPON IT ARE RELIABLE.
In support of its contention that affected DMA members face a significant risk of
irreparable harm from lost sales to Colorado consumers if they are compelled to report
the name, billing address, ship-to addresses and purchase amounts of their customers
to the Department, the DMA has submitted the results of a survey conducted by
Resource Systems Group, Inc. (“RSG”) and the sworn testimony of RSG’s president,
Dr. Thomas Adler. See Declaration of Thomas Adler dated August 13, 2010 [#19] and
DMA Reply [#56], Ex. E (Adler rebuttal declaration). The survey results unequivocally
show that a substantial portion of Colorado consumers will be less likely to buy in the
future from out-of-state retailers required to comply with the law. (See [#19], Ex. B
(Final Results, at 2, 5-6)). Some two-thirds of survey respondents stated that they would
decrease their purchases from affected retailers as a result of the requirements that
retailers report their purchasing information to the Department. Id. The Defendant
asserts, however, that the Court should disregard the survey results and Dr. Adler’s
testimony because the survey was purportedly not conducted with the “same level of
intellectual rigor” that would be used by other survey experts. Amended Motion at 10.
The Defendant is wrong.
It is well-established in the Tenth Circuit that the results of a survey are
admissible if the survey was conducted according to generally accepted principles of
survey methodology. Brunswick Corp. v. Sprinit Reel Co., 832 F.2d 513, 522 (10th Cir.
1987). In that regard, “[t]he survey should sample an adequate or proper universe of
respondents” so that the persons interviewed “adequately represent the opinions which
are relevant to the litigation.” Harolds Stores, Inc. v. Dillard Dept. Stores, 82 F.3d 1533,
1544 (10th Cir. 1996) (internal citations omitted).
More specifically, a survey is
admissible if conducted in accordance with the following factors:
The universe was properly chosen and defined;
The sample chosen was representative of that universe;
The questions were framed in a clear, precise and non-leading manner;
Sound interview/survey procedures were followed;
The data gathered were accurately reported;
The data were analyzed in accordance with accepted statistical principles;
Objectivity of the process was ensured.
Hodgdon Power Co. v. Alliant Techsystems, Inc., 512 F.Supp.2d 1178, 1181 (D. Kan.
2007). As Dr. Adler affirmed at length in his original declaration ([#19] ¶¶ 4, 6-10), and
again during his deposition (e.g., Adler Dep. at 94:3 – 97:17), the RSG survey clearly
satisfies each of these basic requirements.
Indeed, the Defendant in her Amended Motion does not contest that the survey
sampled the proper universe of respondents (i.e., Colorado consumers) and challenges
only one of the seven factors of basic survey methodology, but her critique lacks merit.
Repeating the groundless complaints set forth in her opposition to the Plaintiff’s motion
for preliminary injunction, the Defendant asserts that the words “the kinds of products I
buy” in the survey’s privacy question were misleading, because the law prohibits the
disclosure to the Department of the specific products purchased by consumers. As
noted in the DMA’s reply in support of the motion for preliminary injunction ([#56] at 7-8
n. 8), the Defendant ignores the fact that the specific requirements of the statute are
clearly set forth in the framing terms for the question appearing immediately before the
words which the Defendant lifts out of context.
See also Adler Dec., Ex. B (Final
Results), at 18.
With no genuine basis for challenging the survey methodology, the Defendant
uses the Amended Motion to set forth, again, the arguments made by her own expert,
Professor Donald Lichtenstein, regarding the survey. Amended Motion at 11-14. The
DMA has already thoroughly responded to each of these critiques in its reply in support
of the motion for preliminary injunction and, most notably, in the rebuttal declaration of
Dr. Alder submitted with the reply ([#56], Ex. E), to which the DMA respectfully refers
the Court. 5
The Defendant’s overarching contention that no conclusions can be drawn from
the survey is simply wrong. Both Dr. Adler and the DMA’s marketing expert, Professor
Kevin Keller, have opined that the survey results show that Colorado consumers are
likely to decrease their purchases from affected retailers in the future as a result of the
new law, and shift those purchases to Colorado businesses that are not required to
The only other argument advanced by the Defendant, that the survey was unduly
“influenced” by counsel for the DMA, is nonsense. Dr. Adler testified that it is routine for the
party requesting a survey (typically businesses and government agencies in Dr. Adler’s case) to
have input into the goals of the study and questions to be asked of respondents. Adler Dep. at
152:14-22. Dr. Adler and RSG designed, prepared and fielded the survey, recorded and
tabulated the data, and reported the results, and Dr. Adler, a highly-respected professional with
more than 30 years experience in the industry, has sworn to his opinions regarding the survey
under oath. Adler Dec. at p. 7; Adler Dep. at 150:17 – 152:5. Despite the Defendant’s efforts to
minimize the results of the survey, it fairly presented certain basic questions to Colorado
consumers regarding the new law. The Defendant may not like the responses Coloradans
gave, but the suggestion that their responses were somehow influenced by anything other than
their reaction to the law’s requirements is utterly without merit.
report customer names and other purchasing information to the Department.
survey thus likewise demonstrates that DMA members face a significant risk of
irreparable harm as a result of H.B. 10-1993.
The Act’s notice and reporting
requirements should be enjoined.
IV. PROFESSOR KEVIN KELLER’S OPINIONS REGARDING THE LIKELY
EFFECT OF THE ACT ON CONSUMER PURCHASING DECISIONS ARE
The DMA has also offered the testimony and opinions of Professor Keller in
support of its request for an injunction. As detailed in his declaration, after reviewing the
law, Professor Keller reached the conclusion that the disclosure to the Department of
the purchasing information of Colorado consumers would tend to cause Colorado
consumers to decrease or discontinue purchases from affected retailers and would
have a potentially harmful and permanent affect on the relationships of affected retailers
with their customers and potential customers in Colorado. Keller Dec. ¶¶ 6-8; see also
Keller Dep. 30:1 – 31:22. Keller explained that these conclusions were subsequently
reinforced by the results of the RSG survey. Keller Dec. ¶ 8; Keller Dep. 30:3-13.
In arguing that Professor Keller did not employ a reliable methodology in
reaching his conclusions regarding the affect of H.B. 10-1193 on consumer purchasing
decisions, the Defendant primarily asserts that Professor Keller was unjustified in
relying upon the RSG survey.
Because, as set forth above, the RSG survey was
conducted in accordance with sound survey principles and methodology, Professor
Keller’s reliance upon it is entirely appropriate, and the Defendant’s arguments
regarding Professor Keller should be rejected.
Indeed, Professor Keller had the
opportunity to review the survey as it was being prepared and reached his own
conclusion that it was a sound survey. Keller Dec. ¶¶ 4-5. Moreover, contrary to the
Defendant’s contention that Professor Keller lacked sufficient information to rely upon
the survey, he testified that he was familiar with, and had worked in the past with, not
only Adler, but also KnowledgeNetworks, the outside firm that assisted RSG in
identifying respondents for the survey. Keller Dep. at 12:3-20; 76:13-15; 120:2-8.
addition, Professor Keller testified that he was familiar with the methodology they used
in designing and conducting the survey. Id. at 118:3-20; 120:2-8. The argument that
Professor Keller had insufficient information to rely upon the RSG survey is without
Apart from criticizing Professor Keller’s endorsement and use of the RSG survey
results, the Defendant otherwise seems to argue only that Professor Keller did not
spend enough time reaching his opinion that consumers would react negatively to the
disclosure of their name, address and purchase amount information to the Department.
Professor Keller is one of the leading experts in the nation on consumer behavior. He
has published extensively on the subject, and is the author of the leading consumer
marketing textbook in the world. Before offering his opinions, Professor Keller read the
new law and regulations, evaluated the law’s requirements, and formulated his
He testified, moreover, that his work on this matter coincided with a
revision of his textbook, so that he was reviewing a wealth of materials regarding
consumer behavior and considering consumer purchasing and privacy issues in the
process. Keller Dep. 25:18 – 29:13. In short, the Defendant’s strained argument that
Professor Keller should have required more than 8 hours of work to understand the law
and reach certain fundamental conclusions regarding its impact on consumers utterly
fails to show that his testimony is in any way unreliable.6
For the foregoing reasons, the DMA respectfully requests that the Court deny the
Defendant’s Amended Motion to Exclude the Testimony of Plaintiff’s Expert Witnesses
F. Curtis Barry, Thomas Adler, and Kevin Lane Keller.
Dated: January 10, 2011
s/ Matthew P. Schaefer
George S. Isaacson
Matthew P. Schaefer
BRANN & ISAACSON
184 Main Street, P. O. Box 3070
Lewiston, ME 04243−3070
Tel.: (207) 786−3566
Fax: (207) 783-9325
Attorneys for The Direct Marketing
The Defendant’s criticism that Professor Keller failed to “rule out alternative causes” for the
change in purchasing reported by survey respondents misses the mark. Professor Keller was not asked
by the DMA to explain the causes of an observed reduction in sales already experienced by retailers, but
rather to evaluate the effect on future purchasing behavior of Colorado consumers, in light of the new
notice and reporting requirements imposed upon them by H.B. 10-1193. The law’s reporting requirements
represent a new factor which, all other things being equal, creates a significant risk that consumers will
decrease, or stop purchasing altogether, from affected out-of-state retailers, and shift their purchases to
unaffected Colorado retailers. See Keller Dec. 127:1-9.
CERTIFICATE OF SERVICE
I hereby certify that on January 10, 2011, I electronically filed the foregoing,
Plaintiff’s Response in Opposition to the Defendant’s Amended Motion to Exclude the
Testimony of Plaintiff’s Expert Witnesses F. Curtis Barry, Thomas Adler, and Kevin
Lane Keller [#71] using the CM/ECF system, which will send notification of such filing to
counsel of record:
Senior Assistant Attorney General
State of Colorado
1525 Sherman Street, 7th Floor
Denver, CO 80203
Stephanie Lindquist Scoville
Senior Assistant Attorney General
State of Colorado
1525 Sherman Street, 7th Floor
Denver, CO 80203
Melanie J. Snyder
Assistant Attorney General
State of Colorado
1525 Sherman Street, 7th Floor
Denver, CO 80203
Attorneys for Defendant
s/ Matthew P. Schaefer
Matthew P. Schaefer
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