Direct Marketing Association, The v. Huber
Filing
99
MOTION for Partial Summary Judgment Counts I and II (Commerce Clause) by Defendant Roxy Huber. (Attachments: # 1 Exhibit 1- Fox Decl. & Rep., # 2 Exhibit 2-1 IRS Tax Gap, # 3 Exhibit 2-2 IRS Tax Gap, # 4 Exhibit 2-3 IRS Tax Gap, # 5 Exhibit 2-4 IRS Tax Gap, # 6 Exhibit 2-5 IRS Tax Gap, # 7 Exhibit 2-6 IRS Tax Gap, # 8 Exhibit 2-7 IRS Tax Gap, # 9 Exhibit 2-8 IRS Tax Gap, # 10 Exhibit 3- Saliman Decl., # 11 Exhibit 4- Corjuo Decl., # 12 Exhibit 5- Gable Decl. & Rep., # 13 Exhibit 6- Barry Dep., # 14 Exhibit 7- Stevens Decl., # 15 Exhibit 8- Thompson Decl., # 16 Exhibit 9- Lichtenstein Decl. & Rep., # 17 Exhibit 10- Adler Dep.)(Snyder, Melanie)
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IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
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THE DIRECT MARKETING ASSOCIATION,
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Plaintiff,
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v.
Civil Action No.:
10-CV-01546-REB-CBS
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ROXY HUBER, in her capacity as
Executive Director, Colorado
Department of Revenue,
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Defendant.
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--------------------------------------------------------10
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DEPOSITION OF F. CURTIS BARRY
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October 19, 2010
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Sandston, Virginia
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HALASZ REPORTING & VIDEO
P. O. Box 1644
Richmond, VA 23218-1644
(804) 741-5215
Reported by: Mary L. Rosser, RPR
Exh.6
Page 93
1
Q
Okay.
2
A
Right, or just a hot link, if you know -- you
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So it could be an icon or a URL?
know, like the words "Colorado sales tax".
4
Q
Highlighted and underlined --
5
A
Right.
6
Q
-- you click on that, and then it takes you
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Yeah.
somewhere else?
8
A
Yes.
9
Q
And you assume that the linking notice would
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send customers to a retailer's FAQs; is that right?
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A
It's one way to do it.
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Q
Okay.
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A
Just to have a -- when you do that hot link, to
What would another way to do it be?
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be able to go out to a place either in the web system or
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in the order management system where you have company
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policies so that, you know, we could put out there in a
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user-friendly way what the statute said and what the
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customers' options were, and that they would be required
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to pay the sales tax if, as you know better than I, all
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the possibilities.
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the systems that allow us to do that for both call center
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and e-commerce.
23
Q
So just, you know, we have places in
So it would be possible then for the linking
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notice to take a customer not to the frequently asked
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questions page, but to like the terms and conditions
Exh.6
Page 94
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section of the offer?
A
Yeah.
We don't call it that, but it would be
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just like, you know, our company policies.
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on returns or product damage.
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it probably wouldn't be visible to the customer without
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clicking that maybe.
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Q
It could be
And on the surface of it,
And in terms of the cost that it would take
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companies to create this path, is the cost any different
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if it takes -- if the linking notice takes the customer
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to frequently asked questions, as opposed to the
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company's policy page?
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A
No.
13
Q
Okay.
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What about a pop-up window, would a
pop-up window work as an alternative?
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A
Yes.
16
Q
And would programming the order path for a
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pop-up window be more or less expensive than a linking
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notice?
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A
It might be, it might be somewhat more, but a
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small amount of money.
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you want the customer to click on that, that they accept
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that or not, which is kind of a negative, you know,
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customer service issue.
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25
Q
A question would be, you know, do
And when you said that it might be somewhat more
but a small amount of money, tell me what you mean by
Exh.6
Page 95
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that.
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A
I'm not sure I understand that.
Well, I mean, it's going to vary by company.
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might be a couple thousand dollars more, it might be
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less.
5
Q
To program a prop-up window --
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A
Yeah.
7
Q
-- as opposed to a linking notice?
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A
It
It's not a huge amount, but it would be more
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than just hitting an FAQ.
Q
You mentioned in the last paragraph under
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1(a) -- we're back on Exhibit 1, your report here -- that
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you have used the assumption that companies adopt a
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linking notice, rather than some form of "work around".
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What would a "work around" be?
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A
"Work around", generally the way the term is
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used, is something that may be less desirable, but gets
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it done without major programming.
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19
Q
And what would be some examples of "work
arounds" in this particular context?
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A
I don't have any.
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Q
Let's go back to Exhibit No. 5, if you would,
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which is one of the earlier drafts of your report.
Okay.
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If you would look at page 7, please.
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paragraph says, "Retailers we have talked to are looking
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at a variety of solutions and workarounds including
The second full
Exh.6
Page 97
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did come up, and I told them I didn't think that would
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work.
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BY MS. SCOVILLE:
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Q
Okay.
The second sentence of this paragraph
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says, "Another is that e-commerce customers to force the
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Colorado customer, when they enter their delivery
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address, to have to click a button before proceeding with
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the sale that they understand their sales tax
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obligations."
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Is this something that's actually being
done by a company?
A
No.
I don't remember -- no, but it goes back to
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what I just said a couple of minutes ago.
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negative customer service ramifications.
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It has some
kind of threw this up.
People just
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Q
Okay.
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A
Right.
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Q
-- that was thrown out by one of the people that
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So it was an idea --
you talked to?
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A
Right.
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Q
All right.
The next paragraph says, "There are
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a variety of workarounds that we have heard discussed
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which probably do not meet the regulation.
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e-commerce trigger e-mails to inform the Colorado
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customer after the order is accepted by the system."
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that something that companies are actually doing?
One is using
Is
Exh.6
Page 157
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5
6
Q
So I'm wondering how you took those two numbers
to get to 5- to 10- in the middle.
A
Because I thought it was on the low end of the
range, and I think it's reasonable.
Q
Okay.
Let's go to Exhibit B, which is the
annual purchase summary.
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A
In the final?
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Q
Yes, please, in Exhibit 1.
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Under Subparagraph
1, the last full paragraph, it talks about there are two
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potential sources for the detail order information, the
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operational order processing system and the direct
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marketing system.
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between the two systems?
Can you explain to me the difference
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A
Are we right here?
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Q
Yeah, exactly.
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A
Well, we talked this morning -- I think it was
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this morning -- that, you know, the system, the part of
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the system that we use for the call center to take the
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order, service the customer, that's what we call the
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operational part of it.
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marketing part of it, in other words, if they were using
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the same data, but formatted and analyzed differently
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for, say, the RFM.
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operations.
25
Q
The direct marketing is the
So it's the marketing versus the
And do most retailers have both, the operational
Exh.6
Page 158
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order processing system and the direct marketing
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system?
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A
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the data.
5
Q
It's in the same system.
It's just how you view
There are different reports and things.
Okay.
I guess what I'm trying to understand is,
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all retailers would hold this data, and would most
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retailers be able to view it through both lenses, through
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the operational lens and through the marketing lens?
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10
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A
Catalog companies can.
Again, e-commerce may
not be as sophisticated at the marketing side of it.
Q
Okay.
So e-commerce retailers would be more
likely to view their data through the operating lens?
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A
Right.
14
Q
Okay.
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I see.
But the data already exists,
right?
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A
Yes.
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Q
One of the costs that you list in your report,
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and this goes on to page 2, in terms of the steps that
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are necessary on the annual report, are, No. 6, for the
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accounting department to check the file to determine if
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any corrections are necessary.
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accounting department need to do?
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A
What work would the
Well, what I'm envisioning is, we're not just
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going to run this and then pump out the data.
It was
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something that is very customer sensitive and now reports
Exh.6
Page 169
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literature --
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A
No.
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Q
-- for that number?
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A
No.
5
Q
You conclude that 20 percent of Colorado
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purchasers will buy $500 or more per year from a
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particular retailer.
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10
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MR. SCHAEFER:
How do you know that?
says.
Objection.
That's not what it
It says less than 20 percent.
BY MS. SCOVILLE:
Q
Okay.
Let me start over.
You conclude that
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less than 20 percent of Colorado purchasers will buy $500
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or more a year from a particular retailer.
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know that?
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A
How do you
Just taking the $100 average order as being a
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higher than average order in direct businesses and the
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fact that they're going to buy two times or less on the
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average, they won't reach the $500.
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customers' results over the year, if you have somebody
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that buys $500, you've got a really premium buyer.
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Q
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And did you do any particular studies to
determine that 20 percent is the right percentage?
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I know looking at
MR. SCHAEFER:
A
Same objection, but go ahead.
Less than 20 percent.
conservative number.
I think that's a very
I think it could easily be 10 to 15
Exh.6
Page 170
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because it will be a premium buyer.
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BY MS. SCOVILLE:
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Q
So it could be as low as 10 percent of
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customers?
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A
Yes.
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Q
Okay.
Did you do any studies yourself to
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determine what percentage of folks would buy $500 or
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more?
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A
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No.
I just, as I said, know that from working
with clients' results and experience.
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Q
And did you refer to any published literature?
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A
No.
13
Q
Did you discuss that with the 17 companies with
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whom you spoke?
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A
No.
16
Q
Is published literature available in your field
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that would talk about the percentage of buyers who spend
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more than a certain amount?
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A
There are just general surveys, which are hard
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to apply because they often take in small start-up
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catalogs and very large catalogs and they average things
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together and they end up not sure how to apply the data.
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So could be, but --
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25
Q
And did you try and estimate different
percentages based on small start-up catalogs versus
Exh.6
Page 226
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fulfillment systems with packing inserts in the past?
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A
All the time.
3
Q
What, on average, does a simple packing insert
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cost to place in an individual package?
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A
Under 10 cents.
6
Q
In this case, it needs to be provided with every
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order?
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A
From Colorado.
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Q
So this would be something south of a dime, but
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for every single order placed?
A
Yes.
And then with gifts and ship-to's, because
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the package isn't going -- since the package is not going
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to the purchaser, you'd have to have a separate notice
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mailed to the purchaser.
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to put a notice in the box that this gift -- your
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purchaser is going to have to pay the sales tax.
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not going to do that.
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that fact, whether it's a ship-to or a gift, and send
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that to the purchaser.
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would be, does it have to go first-class or can it go
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bulk.
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Q
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In other words, we're not going
We're
So we're going to have to take
Then the question I would think
So that would be an additional cost with the
ship-to's and gifts?
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A
Yes.
25
Q
Ms. Scoville asked you questions as well about
Exh.6
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