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
[phone]
Reported by: Mary L. Rosser, RPR
Exh.6

Page 93

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Q

Okay.

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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".

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Q

Highlighted and underlined --

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A

Right.

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Q

-- you click on that, and then it takes you

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Yeah.

somewhere else?

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A

Yes.

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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.

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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.

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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.

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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.

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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.

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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.

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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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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.

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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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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.

6

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.

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Q

Did you discuss that with the 17 companies with

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whom you spoke?

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A

No.

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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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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.

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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.

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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.

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Q

Ms. Scoville asked you questions as well about
Exh.6