Case 2:17-cv-02664-DSF-MRW Document 77 Filed 03/05/18 Page 1 of 3 Page ID #:1489
CLARKSON LAW FIRM, P.C. 1 Ryan J. Clarkson (SBN 257074) [email protected] 2 Shireen M. Clarkson (SBN 237882) [email protected] 3 Bahar Sodaify (SBN 289730) [email protected] 4 9255 Sunset Blvd., Ste. 804 Los Angeles, CA 90069 5 Tel: (213) 788-4050 Fax: (213) 788-4070 6 Attorneys for Plaintiff Ketrina Gordon 7
8 IN THE UNITED STATES DISTRICT COURT 9 FOR THE CENTRAL DISTRICT OF CALIFORNIA 10 11 KETRINA GORDON, individually and ) Case No. 2:17-cv-02664-DSF-MRW on behalf of all others similarly ) 12 situated, ) [CLASS ACTION] ) 13 Plaintiff, ) PLAINTIFF’S NOTICE OF ) MOTION AND MOTION FOR 14 vs. ) CLASS CERTIFICATION ) 15 TOOTSIE ROLL INDUSTRIES, INC., ) Hon. Dale Fischer and DOES 1 through 10, inclusive, ) 16 ) Action filed: February 10, 2017 Defendants. ) 17 ) Hearing Date: May 14, 2018 ) Hearing Time: 1:30 pm 18 ) Hearing Location: 7D ) 19 ) ) 20 ) ) 21 ) ) 22 ) 23 24 25 26 27 28
PLAINTIFF’S NOTICE OF MOTION AND MOTION FOR CLASS CERTIFICATION
Case 2:17-cv-02664-DSF-MRW Document 77 Filed 03/05/18 Page 2 of 3 Page ID #:1490
1 PLEASE TAKE NOTICE that on May 14, 2018 at 1:30 pm, in the courtroom 2 of the Honorable Dale Fischer, United States District Court for the Central District 3 of California, Plaintiff Ketrina Gordon (“Plaintiff”), on behalf of herself and all 4 others similarly situated, by and through her counsel Ryan J. Clarkson, Shireen M. 5 Clarkson, and Bahar Sodaify of Clarkson Law Firm, P.C., will and hereby does 6 move for class certification pursuant to Rule 23(b)(2). 7 Plaintiff moves this Honorable Court for an Order as follows: 8 1. That this case is certified to proceed to the merits as a class action 9 pursuant to Rule 23(b)(2) on all three counts (CLRA, UCL, and FAL) set forth in 10 Plaintiff’s Second Amended Complaint (Dkt. 46) on behalf of the following class of 11 consumers (the “Class”): 12 All persons who purchased opaque boxes of 3.5-oz Junior Mints and 6-oz. box 13 of Sugar Babies in the State of California for personal use and not for resale
14 during the time period February 10, 2013, through the present. Excluded from 15 the Class are Defendants’ officers, directors, and employees, and any 16 individual who received remuneration from Defendants in connection with 17 that individual’s use or endorsement of the Product. 18 2. That Plaintiff Ketrina Gordon is appointed Class Representative. 19 3. That Ryan Clarkson, Shireen Clarkson, and Bahar Sodaify of Clarkson 20 Law Firm, P.C. are appointed Class Counsel pursuant to Rule 23(g). 21 This motion it brought in accordance with Local Rule 23-3 and made 22 following a conference of counsel pursuant to Local Rule 7-3. 23 This motion is based upon this notice of motion, the concurrently-filed 24 motion and memorandum of points and authorities in support thereof, the 25 declaration of Ryan J. Clarkson, the declaration of Ketrina Gordon, declarations by 26 Plaintiff’s retained experts, corresponding exhibits, and all of the papers and 27 28
PLAINTIFF’S NOTICE OF MOTION AND MOTION FOR CLASS CERTIFICATION
Case 2:17-cv-02664-DSF-MRW Document 77 Filed 03/05/18 Page 3 of 3 Page ID #:1491
1 pleadings on file in this action, and upon such other and further evidence as the 2 Court may be presented at the time of the hearing. 3 4 DATED: March 5, 2018 CLARKSON LAW FIRM, P.C.
5 /s/ Ryan J. Clarkson______6 Ryan J. Clarkson, Esq. Shireen M. Clarkson, Esq. 7 Bahar Sodaify, Esq. 8 Counsel for Plaintiff 9 10 11 12 13
14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
PLAINTIFF’S NOTICE OF MOTION AND MOTION FOR CLASS CERTIFICATION
Case 2:17-cv-02664-DSF-MRW Document 77-1 Filed 03/05/18 Page 1 of 28 Page ID #:1492
CLARKSON LAW FIRM, P.C. 1 Ryan J. Clarkson (SBN 257074) [email protected] 2 Shireen M. Clarkson (SBN 237882) [email protected] 3 Bahar Sodaify (SBN 289730) [email protected] 4 9255 Sunset Blvd., Ste. 804 Los Angeles, CA 90069 5 Tel: (213) 788-4050 Fax: (213) 788-4070 6 Attorneys for Plaintiff Ketrina Gordon 7
8 IN THE UNITED STATES DISTRICT COURT
9 FOR THE CENTRAL DISTRICT OF CALIFORNIA
10 KETRINA GORDON, individually and ) Case No. 2:17-cv-02664-DSF-MRW 11 on behalf of all others similarly ) situated, ) [CLASS ACTION]
12 ) P.C.
, Plaintiff, ) PLAINTIFF’S MEMORANDUM
IRM 13 ) OF POINTS AND AUTHORITIES F vs. ) IN SUPPORT OF MOTION FOR AW
L 14 ) CLASS CERTIFICATION UNDER TOOTSIE ROLL INDUSTRIES, INC., ) RULE 23(b)(2) 15 and DOES 1 through 10, inclusive, )
LARKSON ) REDACTED VERSION OF Los Angeles, CA 90069 CA Angeles, Los C 16 Defendants. ) DOCUMENT PROPOSED TO BE 9255 Sunset Blvd., Suite 804 Suite Blvd., 9255 Sunset ) UNDER SEAL 17 ) ) Hon. Dale S. Fischer 18 ) ) Action filed: February 10, 2017 19 ) ) Hearing Date: May 14, 2018 20 ) Hearing Time: 1:30 pm ) Hearing Location: 7D 21 )
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PLAINTIFF’S MEMORANDUM OF POINTS AND AUTHORITIES Case 2:17-cv-02664-DSF-MRW Document 77-1 Filed 03/05/18 Page 2 of 28 Page ID #:1493
1 TABLE OF CONTENTS 2 Page(s)
3 I. INTRODUCTION ...... 1
4 II. FACTS AND PROCEDURAL BACKGROUND ...... 1
5 A. The Parties ...... 2
6 B. Plaintiff’s Claims ...... 2
7 C. The Proposed Class ...... 5
8 D. Procedural History ...... 5
9 E. The Products’ Packaging at Issue ...... 6
10 F. Sales and Distribution of the Products ...... 6
11
III. LEGAL STANDARD FOR CLASS CERTIFICATION ...... 7
12 IV. CERTIFICATION HERE MEETS THE INTENT AND OBJECTIVE P.C.
, OF RULE 23 ...... 7
IRM 13
F V. PLAINTIFF SATISFIES ALL REQUIREMENTS UNDER RULE 23 ...... 8 AW L 14 A. Plaintiff Satisfies the Prerequisites of Rule 23(a)...... 8 15 LARKSON Los Angeles, CA 90069 CA Angeles, Los C 1. Numerosity...... 9 16 9255 Sunset Blvd., Suite 804 Suite Blvd., 9255 Sunset 2. Commonality ...... 9 17 3. Typicality...... 15 18 4. Adequate Representation...... 16 19
20 B. THE REQUIREMENTS OF RULE 23(b)(2) ARE SATISFIED ...... 17
21 1. Plaintiff has Article III Standing...... 18
22 2. Plaintiff and the Class Complain of Standardized Uniform Conduct Applicable to the Entire Class...... 20 23 3. Plaintiff Seeks Injunctive Relief That Would Benefit the 24 Class...... 22
25 VI. CONCLUSION ...... 23
26
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28 i PLAINTIFF’S MEMORANDUM OF POINTS AND AUTHORITIES Case 2:17-cv-02664-DSF-MRW Document 77-1 Filed 03/05/18 Page 3 of 28 Page ID #:1494
1 TABLE OF AUTHORITIES
2 CASES 3 Amchem Prods. v. Windsor, 4 521 U.S. 591 (1997) ...... 7
5 Armstrong v. Davis, 275 F.3d 849 (9th Cir. 2001) ...... 15 6 Astiana v. Kashi Co., 7 291 F.R.D. 493 (S.D. Cal. 2013) ...... 15
8 Bates v. United Parcel Svc., Inc., 511 F.3d 974 (9th Cir. 2007) ...... 18 9 Bruno v. Eckhart Corp., 10 280 F.R.D. 540 (C.D.Cal.2012) ...... 14
11 Bruno v. Quten Research Inst., LLC, 280 F.R.D. 524, 535 (C.D.Cal.2011) ...... 13
12 P.C.
, California Rural Legal Assistance, Inc. v. Legal Servs. Corp., 917 F.2d 1171 (9th Cir. 1990) ...... 15 IRM 13 F
AW Chavez v. Blue Sky Natural Beverage Co., L 14 268 F.R.D. 365 (N.D.Cal.2010) ...... 14 15
LARKSON Cruz v. PacifiCare Health Systems, Inc., Los Angeles, CA 90069 CA Angeles, Los C 16 30 Cal.4th 303 (2003) ...... 22 9255 Sunset Blvd., Suite 804 Suite Blvd., 9255 Sunset 17 Datta v. Asset Recovery Sols., LLC, No. 15-CV-00188-LHK, 2016 U.S. Dist. LEXIS 36446, 18 (N.D. Cal. Mar. 18, 2016) ...... 8
19 Davidson v. Kimberly-Clark Corp., 873 F.3d 1103 (9th Cir. 2017) ...... 18, 19, 20 20 Delarosa v. Boiron, Inc., 21 275 F.R.D. 582 (C.D. Cal. 2011) ...... 22
22 Eisen v. Carlisle & Jacquelin, 417 U.S. 156 (1974) ...... 7 23 Ellis v. Costco Wholesale Corp., 24 657 F.3d 970 (9th Cir. 2011) ...... 16
25 Hanlon v. Chrysler Corp., 150 F.3d 1011 (9th Cir.1998) ...... passim 26 Hanon v. Dataprods. Corp., 27 976 F.2d 497 (9th Cir.1992) ...... 7, 9
28 ii PLAINTIFF’S MEMORANDUM OF POINTS AND AUTHORITIES Case 2:17-cv-02664-DSF-MRW Document 77-1 Filed 03/05/18 Page 4 of 28 Page ID #:1495
Harris v. Palm Springs Alpine Estates, Inc., 1 329 F.2d 909 (9th Cir. 1964) ...... 7, 9
2 Hinojos v. Kohl’s Corp., 718 F.3d 1098 (9th Cir. 2013) ...... 14 3 In re Tobacco II Cases, 4 46 Cal. 4th 298 (2009) ...... 11
5 In re Yahoo Mail Litigation 308 F.R.D. 577 (N.D. Cal. 2015) ...... 21 6 Jordan v. County of Los Angeles, 7 669 F.2d 1311 (9th Cir.1982) ...... 9
8 Just Film, Inc. v. Buono, 847 F.3d 1108 (9th Cir. 2017) ...... 8 9 Keegan v. Am. Honda Motor Co., Inc., 10 284 F.R.D. 504 (C.D. Cal. 2012) ...... 14
11
Khasin v. R. C. Bigelow, Inc.,
No. 12-cv-02204-WHO, 2016 U.S. Dist. LEXIS 115850, 12 (N.D. Cal. Aug. 29, 2016) ...... 19 P.C.
,
IRM 13
F Lewis v. Robinson Ford Sales, Inc., 156 Cal.App.4th 359 (2007) ...... 11 AW L 14 Lozano v. AT&T Wireless Servs., 15 504 F.3d 718 (9th Cir. 2007) ...... 16 LARKSON Los Angeles, CA 90069 CA Angeles, Los C 16 9255 Sunset Blvd., Suite 804 Suite Blvd., 9255 Sunset Mazza v. Am. Honda Motor Co., 666 F.3d 581 (9th Cir. 2012) ...... 18 17 Pinon v. Tristar Prods., Inc., 18 No. 1:16-cv-00331-DAD-SAB, 2016 WL 4548766, (E.D. Cal. Sept. 1, 2016) ...... 18 19 Ries v. Arizona Beverages USA LLC, 20 287 F.R.D. 523 (N.D. Cal. 2012) ...... 22
21 Rodriguez v. Hayes, 591 F.3d 1105 (9th Cir. 2010) ...... 9 22 Staton v. Boeing Co., 23 327 F.3d 938 (9th Cir. 2003) ...... 7
24 Turcios v. Carma Labs., Inc., 296 F.R.D. 638 (C.D. Cal. 2014) ...... 9 25 Valentino v. Carter-Wallace, Inc., 26 97 F.3d 1227 (9th Cir. 1996) ...... 8
27 Vasquez v. Superior Court, 4 Cal.3d 800 (1971) ...... 7, 11 28 iii PLAINTIFF’S MEMORANDUM OF POINTS AND AUTHORITIES Case 2:17-cv-02664-DSF-MRW Document 77-1 Filed 03/05/18 Page 5 of 28 Page ID #:1496
1 Victor v. R.C. Bigelow, Inc., 708 F. App’x 333 (9th Cir. 2017) ...... 18, 19, 20 2 Walters v. Reno, 3 145 F.3d 1032 (9th Cir. 1998) ...... 9, 20
4 Wolin v. Jaguar Land Rover N. Am., LLC, 617 F.3d 1168 (9th Cir.2010) ...... 8 5 Yumul v. Smart Balance, Inc., 6 733 F.Supp.2d 1117 (C.D.Cal.2010) ...... 13 7 OTHER AUTHORITIES 8 7A Charles Alan Wright et al., Federal Practice & Procedure §1775 (2d ed. 1986) ...... 20 9 21 C.F.R. § 100.100 ...... 2, 3, 10, 13 Business and Professions Code Section 12606.2 ...... 2, 3, 10, 13 10 Business and Professions Code Section 17200 ...... 2 Business and Professions Code Section 17500 ...... 2 11
Civil Code Section 1750 ...... 2
Civil Code Section 1782(a) ...... 5 12 Downton 2002; TARP 1986 ...... 12 P.C.
, Federal Rule of Civil Procedure 12 ...... passim
IRM 13
F Federal Rule of Civil Procedure 23 ...... passim AW
L 14 15 LARKSON Los Angeles, CA 90069 CA Angeles, Los C 16 9255 Sunset Blvd., Suite 804 Suite Blvd., 9255 Sunset 17 18 19 20 21 22 23 24 25 26 27 28 iv PLAINTIFF’S MEMORANDUM OF POINTS AND AUTHORITIES Case 2:17-cv-02664-DSF-MRW Document 77-1 Filed 03/05/18 Page 6 of 28 Page ID #:1497
1 I. INTRODUCTION 2 This is a consumer class action brought on behalf of purchasers of various 3 “theater box” candy products sold at retail outlets and movie theaters throughout 4 California; specifically, 3.5-oz. Junior Mints and 6-oz. Sugar Babies (the 5 “Products”). Plaintiff Ketrina Gordon (“Plaintiff”) contends that Defendant 6 Tootsie Roll Industries, Inc. (“Defendant” or “Tootsie”) unlawfully packages each 7 of the Products in opaque boxes too large for the amount of candy contained 8 therein. The oversized boxes render much of the volume in the nontransparent 9 boxes nonfunctional empty space, or “slack-fill,” in violation of California and 10 federal packaging laws, as well as California’s consumer protection laws. Plaintiff 11 contends that Defendant’s oversized packaging falsely represents to consumers
12 the quantity of candy and is a material issue to consumers that can be proven with P.C.
,
IRM 13 common evidence. The fix is simple: shrink the box, fill the box, or add additional F AW
L 14 features to the box that eliminate the consumer deception. Plaintiff hereby moves 15 to certify an injunctive relief class under Rule1 23(b)(2).2 LARKSON Los Angeles, CA 90069 CA Angeles, Los C 16 9255 Sunset Blvd., Suite 804 Suite Blvd., 9255 Sunset II. FACTS AND PROCEDURAL BACKGROUND 17 The average consumer spends roughly 12 seconds to make an in-store 18 purchasing decision, a decision which is heavily dependent on a product’s 19 package dimensions. See Report of Dr. Forrest V. Morgeson ¶¶ 17-18, attached as 20 Exhibit (“Ex.”) B to the Declaration of Dr. Forrest V. Morgeson (“Morgeson 21 Decl.”). In fact, most consumers do not bother to look at label information, no less 22 the net weight. Id. Faced with a larger box and a smaller box, both with the same 23 amount of product inside, consumers are apt to choose the larger box because they 24 perceive it is a better value. Id. ¶¶ 5, 18. 25 1 References to any “Rule(s)” means the Federal Rules of Civil Procedure unless 26 otherwise stated. 2 This motion is limited to a request for certification of an injunctive relief only 27 class under Rule 23(b)(2) because Plaintiff’s primary motivation for bringing this class action was to correct Defendant’s unlawful packaging. Plaintiff reserves her 28 right to seek leave of Court, should she establish liability on the merits, to try a damages phase on a classwide basis pursuant to Rule 23(b)(3). 1 PLAINTIFF’S MEMORANDUM OF POINTS AND AUTHORITIES Case 2:17-cv-02664-DSF-MRW Document 77-1 Filed 03/05/18 Page 7 of 28 Page ID #:1498
1 A. The Parties 2 Plaintiff is a resident of Los Angeles, California. See declaration of Plaintiff 3 Ketrina Gordon (“Gordon Decl.”) ¶ 3. Plaintiff made a one-time purchase of a 4 3.5-oz. box of Junior Mints to share with her friends at the movies in Los Angeles 5 in 2016. Id. ¶¶ 5, 8. Plaintiff paid approximately $4.00 for the Product. Id. ¶ 6. In 6 making her purchase, Plaintiff relied upon the opaque Product packaging, 7 including the size of the box. Id. ¶¶ 7-12. Yet, Plaintiff received a roughly half- 8 empty box of candy. Id. ¶¶ 11-13. Defendant manufacturers the Products and is 9 one of the largest confectionary companies in the world with annual sales of 10 3 11 B. Plaintiff’s Claims
12 Plaintiff’s Second Amended Complaint (“SAC”) (Dkt. 46) asserts three P.C.
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IRM 13 causes of action under Business and Professions Code Section 17200, et seq., the F AW
L 14 Unfair Competition Law (“UCL”), Business and Professions Code Section 17500, 15 et seq., the False Advertising Law (“FAL”), and Civil Code Section 1750, et seq., LARKSON Los Angeles, CA 90069 CA Angeles, Los C 16 9255 Sunset Blvd., Suite 804 Suite Blvd., 9255 Sunset the Consumers Legal Remedies Act (“CLRA”) based on Defendant’s deceptive 17 and misleading Product packaging and the presence of nonfunctional slack-fill 18 contained therein. SAC ¶¶ 118, 135, 145. Plaintiff contends the following: 19 California and federal law prohibit food containers from being “made, 20 formed, or filled as to be misleading.” FAC ¶ 153; Cal. Bus. & Prof. Code § 21 12606.2; 21 C.F.R. § 100.100. An opaque, or non-transparent, container “shall be 22 considered to be filled as to be misleading if it contains nonfunctional slack-fill.” 23 Id. “Slack-fill is the difference between the actual capacity of a container and the 24 volume of product contained therein.” Id. Nonfunctional slack-fill is the empty 25 space in a package that is filled substantially less for reasons other than six 26
27 3 Defendant’s treasurer of over wen, estimated Tootsie Roll Industries, Inc.’s annual sales . See Barry Bowen deposition 28 transcript (“Bowen Tr.”) at 17 ttached as Exhibit (“Ex.”) 1 to declaration of Ryan J. Clarkson (“RJC Decl.”). 2 PLAINTIFF’S MEMORANDUM OF POINTS AND AUTHORITIES Case 2:17-cv-02664-DSF-MRW Document 77-1 Filed 03/05/18 Page 8 of 28 Page ID #:1499
1 reasons permitted under these statutes. Id. Here, each respective Product 2 throughout the Class Period4 has been packaged in identical opaque cardboard 3 theater boxes, and has been made, formed, and filled in the same way.5 Each 4 respective Product therefore contains a uniform amount of slack-fill, and more 5 specifically, uniform amounts of functional and nonfunctional slack-fill. Id. Thus, 6 proof that a single unit of Product (e.g. 3.5-oz. Junior Mints) contains 7 nonfunctional slack-fill shall constitute proof as to all units of that Product. 8 Count I (Violation of the CLRA). Defendant’s business practice of 9 manufacturing and selling the Products in oversized, opaque packaging with 10 substantial nonfunctional slack-fill6 violates the CLRA by (1) misrepresenting the 11 approval of the Products as compliant with 21 C.F.R. Section 100.100 and
12 California Business and Professions Code Section 12606.2; (2) using deceptive P.C.
,
IRM 13 representations in connection with the Products; (3) representing that the Products F AW
L 14 have characteristics and quantities that they do not have; (4) advertising and 15 packaging the Products with intent not to sell them as advertised and packaged; LARKSON Los Angeles, CA 90069 CA Angeles, Los C 16 9255 Sunset Blvd., Suite 804 Suite Blvd., 9255 Sunset and (5) representing that the Products have been supplied in accordance with a 17 previous representation as to the quantity of candy product contained within each 18 box, when they have not. SAC (Dkt. 46) ¶ 122. 19 Count II (Violation of the FAL). Defendant’s business practice of 20 manufacturing and selling the Products in oversized, opaque packaging with 21 substantial nonfunctional slack-fill violates the FAL because it constitutes a 22 dissemination of an advertising device which is untrue or misleading. SAC ¶ 136. 23 /// 24
25 4 The “Class Period” is February 10, 2013 through the present. 5 See Defendant’s plant manager, Paula Yetman, deposition transcript (“Yetman 26 Tr.”) at 63:7-65:16, 68:18-69:14,71:1-18; 122: 2-10, Ex. 2 to RJC Decl. 6 Plaintiff’s SAC (Dkt. 46) avers that the amount of nonfunctional slack-fill 27 contained in each of the Products is 45%. However, where that number differs from Plaintiff’s expert in packaging design engineering, Dr. Claire Sand, Plaintiff 28 defers to Dr. Sand’s calculations. Plaintiff shall amend the pleadings to conform to the evidence, if and/or when necessary. RJC Decl. ¶ 4. 3 PLAINTIFF’S MEMORANDUM OF POINTS AND AUTHORITIES Case 2:17-cv-02664-DSF-MRW Document 77-1 Filed 03/05/18 Page 9 of 28 Page ID #:1500
1 Count III (Violation of the UCL). Defendant’s business practice of 2 manufacturing and selling the Products in oversized, opaque packaging with 3 substantial nonfunctional slack-fill violates the UCL as follows: First, in violation 4 of the “unlawful” prong, Defendant’s inclusion of substantial nonfunctional slack- 5 fill in the Products’ opaque packaging violates federal and California slack-fill 6 laws, which state: “A container that does not allow the consumer to fully view its 7 contents shall be considered to be filled as to be misleading if it contains 8 nonfunctional slack-fill.” SAC (Dkt. 46) ¶ 185. Second, in violation of the 9 “unfair” prong, the financial injury caused by Defendant’s packaging outweighs 10 any benefits provided to consumers, and said injury is one that consumers could 11 not reasonably avoid. Id. ¶ 173. Third, in violation of the “fraudulent” prong,
12 Defendant’s conduct is likely to deceive members of the public. Id. ¶ 177. P.C.
,
IRM 13 Expectedly, Defendant’s primary focus as a for-profit corporation is sales— F AW
L 14 adherence to California and federal consumer protection laws and slack-fill 15 regulations is a mere after-thought.7 RJC Decl. Ex 3 (Brown Tr.) at 42:11-18, LARKSON Los Angeles, CA 90069 CA Angeles, Los C 16 9255 Sunset Blvd., Suite 804 Suite Blvd., 9255 Sunset 87:9-14 (A: 17 18 19 RJC Decl. Ex. 2 (Yetman Tr.) at 115: 16-23 20 (“Q: 21 22 23 ”). 24 In fact, Defendant is aware that its Products contain nonfunctional slack- 25 fill. Indeed, after Plaintiff filed the instant lawsuit, Defendant planned a number of 26 27
28 7 See deposition transcript of Defendant’s director of research and development in quality assurance, Charles Gordon Brown (“Brown Tr.”), Ex. 3 to RJC Decl. 4 PLAINTIFF’S MEMORANDUM OF POINTS AND AUTHORITIES Case 2:17-cv-02664-DSF-MRW Document 77-1 Filed 03/05/18 Page 10 of 28 Page ID #:1501
1 subsequent remedial measures intended to address Plaintiff’s allegations.8 2 Specifically, 3 4 5 6 7 8 While the reasonable consumer expects the Products to contain only about 9 33% slack-fill,9 Defendant’s Products contain substantially more than that: 61.3% 10 in Junior Mints and 54.3% in Sugar Babies.10 This is clear evidence of consumer 11 deception.
12 C. The Proposed Class P.C.
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IRM 13 Plaintiff seeks class certification under Rule 23(b)(2) of the following F AW
L 14 California class (the “Class”): 15 All persons who purchased opaque boxes of 3.5-oz Junior Mints and
LARKSON 6.0 Sugar Babies in California for personal use and not for resale during Los Angeles, CA 90069 CA Angeles, Los C 16 9255 Sunset Blvd., Suite 804 Suite Blvd., 9255 Sunset the time period February 10, 2013, through the present. Excluded from 17 the Class are Defendants’ officers, directors, and employees, and any individual who received remuneration from Defendants in connection 18 with that individual’s use or endorsement of the Product. 19 See SAC (Dkt. 46) ¶ 108. 20 D. Procedural History 21 On February 10, 2017, Plaintiff filed her class action complaint in Los 22 Angeles County Superior Court (Dkt. 1-1). Prior thereto, Plaintiff provided notice 23 to Defendant pursuant to Civil Code Section 1782(a). RJC Decl. ¶ 3. On May 1, 24 2017, Defendant filed a motion to dismiss Plaintiff’s complaint or, in the 25
26 8 See Defendant’s marketing manager, Stephen Modaff, deposition transcript (“Modaff Tr.”) at 86:6-91:13, 97:16-101:6, attached as Ex. 4 to RJC Decl. 27 9 Expert report of Dr. Justin Lenzo and Dr. Michael Bechtel, attached as Ex. B to Declaration of Justin Lenzo (“Lenzo Decl.) ¶¶ 23, 97. 28 10 Expert report of Dr. Claire Sand at p. 29, Tbl.12, attached as Ex. B to Declaration of Dr. Claire Sand (“Sand Decl.”). 5 PLAINTIFF’S MEMORANDUM OF POINTS AND AUTHORITIES Case 2:17-cv-02664-DSF-MRW Document 77-1 Filed 03/05/18 Page 11 of 28 Page ID #:1502
1 alternative, to strike (Dkt. 13). Plaintiff opted to file her FAC on May 22, 2017 2 (Dkt. 17). On June 5, 2017, Defendant filed a Rule 12(b)(6) motion to dismiss 3 (Dkt. 19). On July 31, 2017, this Court denied Defendant’s motion as to Junior 4 Mints and granted as to Sugar Babies with leave to amend (Dkt. 37). Plaintiff 5 amended her FAC with additional facts as to substantially similarity between 6 Junior Mints and Sugar Babies (Dkt. 46). Defendant then filed a second Rule 7 12(b)(6) motion (Dkt. 50), on Plaintiff’s SAC which the Court denied (Dkt. 55). 8 The parties then engaged in substantial discovery. RJC Decl. ¶ 5. On November 9 21, 2017, Defendant moved to compel the identity of Plaintiff’s consulting experts 10 (Dkt. 57), which the parties briefed (Dkt. 58), and the Court denied (Dkt. 62). On 11 January 4, 2018, Defendant deposed Plaintiff. RJC Decl. ¶ 6. On January 17-19,
12 2018, Plaintiff traveled to Chicago, Illinois to take Defendant’s Rule 30(b)(6) P.C.
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IRM 13 depositions. Id. ¶ 8. On February 15-16, 2018, Plaintiff traveled to Boston, F AW
L 14 Massachusetts to take additional depositions of Defendant’s fact witnesses. Id. ¶ 15 12. LARKSON Los Angeles, CA 90069 CA Angeles, Los C 16 9255 Sunset Blvd., Suite 804 Suite Blvd., 9255 Sunset E. The Products’ Packaging at Issue. 17 The following chart represents the key measurements11 of the Products:
18 Product Length Width Depth Net Candy Slack- Nonfunctional 19 (cm) (cm) (cm) Weight Volume Fill Slack-Fill (oz.) (%) (%) (%) 20 Junior Mints 8.07 1.68 13.84 3.5 38.7 61.3 40.7 21 Sugar Babies 8.75 1.69 17.36 6.0 45.7 54.3 33.6 22 23 F. Sales and Distribution of the Products. 24 Defendant’s gross wholesale sales of the Products to California retailers for 12 25 the Class Period exceed . Discovery is ongoing as to retail sales. 26 RJC Decl. ¶ 14.
27 11 See Sand Decl. Ex. B (Sand Report) at pp. 24-26, Tbl. 5, 7. 28 12 See Defendant’s Second Supplemental Responses served on November 10, 2017, in response to Plaintiff’s Special Interrogatories, Set One (Interrogatory no. 6 PLAINTIFF’S MEMORANDUM OF POINTS AND AUTHORITIES Case 2:17-cv-02664-DSF-MRW Document 77-1 Filed 03/05/18 Page 12 of 28 Page ID #:1503
1 III. LEGAL STANDARD FOR CLASS CERTIFICATION 2 Rule 23 provides the standard for certification of a class action. Hanon v. 3 Dataprods. Corp., 976 F.2d 497, 508–09 (9th Cir.1992). Rule 23 has two sets of 4 requirements: plaintiffs must meet all of the requirements under Rule 23(a) and 5 must also satisfy at least one of the Rule 23(b) prongs. Id. Class certification 6 presents a procedural issue and not a merits determination. “In determining the 7 propriety of a class action, the question is not whether the plaintiff has stated a 8 cause of action or will prevail on the merits, but rather whether the requirements 9 of Rule 23 are met.” Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 178 (1974); see 10 also Hanon, 976 F.2d at 508. The court may consider evidence which goes to the 11 requirements of Rule 23, but should not weigh competing evidence. Staton v.
12 Boeing Co., 327 F.3d 938, 954 (9th Cir. 2003). P.C.
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IRM 13 Consumer protection claims are ideal for class certification and any doubt as F AW
L 14 to the propriety of certification should be resolved in favor of certifying the class. 15 See, e.g., Amchem Prods. v. Windsor, 521 U.S. 591, 625 (1997); Harris v. Palm LARKSON Los Angeles, CA 90069 CA Angeles, Los C 16 9255 Sunset Blvd., Suite 804 Suite Blvd., 9255 Sunset Springs Alpine Estates, Inc., 329 F.2d 909, 913 (9th Cir. 1964); Vasquez v. 17 Superior Court, 4 Cal.3d 800, 808 (1971). As detailed below, Plaintiff satisfies 18 each of the prerequisites of Rules 23(a) and (b)(2).
19 IV. CERTIFICATION HERE MEETS THE INTENT AND OBJECTIVE 20 OF RULE 23 21 In crafting Rule 23, the United States Supreme Court explained that “the 22 Advisory Committee had in mind vindication of the rights of groups of people 23 who individually would be without effective strength to bring their opponents into 24 court at all.” Amchem Prods., Inc., 521 U.S at 617. Indeed, “The policy at the very 25 core of the class action mechanism is to overcome the problem that small 26 recoveries do not provide the incentive for any individual to bring a solo action 27
28 4), attached as Ex. 5 to RJC Decl. The only accounts for sales through June 2017. Id. 7 PLAINTIFF’S MEMORANDUM OF POINTS AND AUTHORITIES Case 2:17-cv-02664-DSF-MRW Document 77-1 Filed 03/05/18 Page 13 of 28 Page ID #:1504
1 prosecuting his or her rights.” Datta v. Asset Recovery Sols., LLC, No. 15-CV- 2 00188-LHK, 2016 U.S. Dist. LEXIS 36446, at *24 (N.D. Cal. Mar. 18, 2016); 3 Just Film, Inc. v. Buono, 847 F.3d 1108, 1123–1124 (9th Cir. 2017) (citing to 4 Valentino v. Carter-Wallace, Inc., 97 F.3d 1227, 1234 (9th Cir. 1996)) (“The 5 court concluded that the ‘risks, small recovery, and relatively high costs of 6 litigation’ make it unlikely that plaintiffs would individually pursue their claims. 7 These considerations are at the heart of why the Federal Rules of Civil Procedure 8 allow class actions in cases where Rule 23’s requirements are satisfied. This case 9 vividly points to the need for class treatment. The individual damages of each 10 merchant are too small to make litigation cost effective in a case against funded 11 defenses and with a likely need for expert testimony. The district court also found
12 that class action was superior because litigation on a class wide basis would P.C.
,
IRM 13 promote greater efficiency in resolving the classes’ claim.”); Wolin v. Jaguar F AW
L 14 Land Rover N. Am., LLC, 617 F.3d 1168, 1175 (9th Cir. 2010) (The Ninth Circuit 15 has explained that “[w]here recovery on an individual basis would be dwarfed by LARKSON Los Angeles, CA 90069 CA Angeles, Los C 16 9255 Sunset Blvd., Suite 804 Suite Blvd., 9255 Sunset the cost of litigating on an individual basis, this factor weighs in favor of class 17 certification.”) 18 Here, class certification will meet the Ninth Circuit’s and Rule 23’s 19 objective of vindicating the rights of consumers who have been misled and 20 financially harmed by large corporations like Defendant, but separately lack the 21 necessary resources to pursue an individual action. In the instant resource- 22 intensive, expert-driven case, each consumer’s individual damages would not 23 justify the time and expense of bringing separate actions. 24 V. PLAINTIFF SATISFIES ALL REQUIREMENTS UNDER RULE 23 25 A. Plaintiff Satisfies the Prerequisites of Rule 23(a). 26 “Fed. R. Civ. P. 23(a) states four threshold requirements applicable to all 27 class actions: (1) numerosity (a class so large that joinder of all members is 28 impracticable); (2) commonality (questions of law or fact common to the class);
8 PLAINTIFF’S MEMORANDUM OF POINTS AND AUTHORITIES Case 2:17-cv-02664-DSF-MRW Document 77-1 Filed 03/05/18 Page 14 of 28 Page ID #:1505
1 (3) typicality (named parties’ claims or defenses are typical of the class); and (4) 2 adequacy of representation (representatives will fairly and adequately protect the 3 interests of the class).” Fed. R. Civ. P. 23(a); Hanon, 976 F.2d at 508.
4 1. Numerosity 5 Rule 23(a)(1) requires the class to be so numerous that joinder of individual 6 class members is impracticable. Fed. R. Civ. P. 23(a)(1). “Impracticability does 7 not mean impossibility, [however,] . . . only . . . difficulty or inconvenience in 8 joining all members of the class.” Harris, supra, 329 F.2d at 913–914. There is no 9 set numerical cutoff used to determine whether a class is sufficiently numerous. 10 Turcios v. Carma Labs., Inc., 296 F.R.D. 638, 641 (C.D. Cal. 2014) (numerosity 11 is satisfied when there are as few as 39 potential class members).
12 As of June 2017, Defendant’s gross wholesale sales of the Products to P.C.
, 13
IRM 13 California retailers for the Class Period exceed , which at F
AW 14
L 14 approximately , equates roughly to 15 . Therefore, Plaintiff has met her burden of LARKSON Los Angeles, CA 90069 CA Angeles, Los C 16 9255 Sunset Blvd., Suite 804 Suite Blvd., 9255 Sunset demonstrating that the proposed class is sufficiently numerous.
17 2. Commonality 18 The commonality requirement “serves chiefly two purposes: (1) ensuring 19 that absentee members are fairly and adequately represented; and (2) ensuring 20 practical and efficient case management.” Walters v. Reno, 145 F.3d 1032, 1045 21 (9th Cir. 1998); Rodriguez v. Hayes, 591 F.3d 1105, 1122 (9th Cir. 2010). 22 Commonality requires “questions of law or fact common to the class.” Fed. R. 23 Civ. Proc. 23(a)(2). The commonality requirement is construed liberally, and the 24 existence of some common legal and factual issues is sufficient. Jordan v. County 25 of Los Angeles, 669 F.2d 1311, 1320 (9th Cir.1982); accord Hanlon v. Chrysler 26 Corp., 150 F.3d 1011, 1019 (9th Cir.1998) (“The commonality preconditions of 27
28 13 See RJC Decl. Ex. 5 at Interrogatory 4. 14 See RJC Decl. Ex. 1 (Bowen Tr.) at 37:12-23. 9 PLAINTIFF’S MEMORANDUM OF POINTS AND AUTHORITIES Case 2:17-cv-02664-DSF-MRW Document 77-1 Filed 03/05/18 Page 15 of 28 Page ID #:1506
1 Rule 23(a)(2) are less rigorous than the companion requirements of Rule 2 23(b)(3).”). Indeed, Rule 23(a)(2) has been construed permissively. As the Ninth 3 Circuit has noted: “[a]ll questions of fact and law need not be common to satisfy 4 the rule. The existence of shared legal issues with divergent factual predicates is 5 sufficient, as is a common core of salient facts coupled with disparate legal 6 remedies within the class.” Hanlon, 150 F.3d at 1019. That said, the putative 7 class’ “claims must depend upon a common contention . . . . That common 8 contention, moreover, must be of such a nature that it is capable of class-wide 9 resolution— which means that determination of its truth or falsity will resolve an 10 issue that is central to the validity of each one of the claims in one stroke.” Wal- 11 Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541, 2551 (2011). Although for purposes
12 of Rule 23(a)(2) even a single common question is sufficient. Id. at 2556. “What P.C.
,
IRM 13 matters to class certification ... is not the raising of common ‘questions’— even in F AW
L 14 droves—but, rather the capacity of a class-wide proceeding to generate common 15 answers apt to drive the resolution of the litigation.” Id. at 2551. LARKSON Los Angeles, CA 90069 CA Angeles, Los C 16 9255 Sunset Blvd., Suite 804 Suite Blvd., 9255 Sunset Here, the commonality element is satisfied because the claims pose a few 17 key common questions: (1) whether the Products’ opaque packaging is unlawful, 18 unfair, fraudulent, or likely to deceive the reasonable consumer, where it contains 19 less candy (and more empty space) than consumers expected; (2) whether the size 20 of the Products’ boxes is material to Plaintiff and class members in deciding to 21 purchase the Products; (3) whether the Products contain nonfunctional slack-fill in 22 violation of California Business and Professions Code Section 12606.2 or 21 23 C.F.R. Section 100.100; and (4) whether Defendant has acted or refused to act on 24 grounds that apply generally to the class, so that final injunctive relief is 25 appropriate respecting the class as a whole. 26 Because all class members purchased the same Products, were exposed to 27 the same packaging, and received the same amount of candy (and slack-fill), there 28 is “a common core of salient facts.” Hanlon, 150 F.3d at 1019. Further, the six
10 PLAINTIFF’S MEMORANDUM OF POINTS AND AUTHORITIES Case 2:17-cv-02664-DSF-MRW Document 77-1 Filed 03/05/18 Page 16 of 28 Page ID #:1507
1 exceptions used to determine when slack-fill is functional uniformly applies 2 across all units of each respective Product. As such, if Plaintiff proves that one 3 unit of 3.5-oz. box of Junior Mints contains substantial nonfunctional slack-fill, 4 then that will be true of every 3.5-oz. box of Junior Mints. This will resolve “in 5 one stroke” an issue that is “central to the validity” of each class member’s 6 claims, i.e., whether the Products’ packaging violated California and federal 7 packaging laws and, by extension, California’s consumer protection laws. Wal- 8 Mart Stores, 131 S. Ct. at 2551. 9 Common legal issues include such basic questions as whether the 10 misrepresentations were material. See Lewis v. Robinson Ford Sales, Inc., 156 11 Cal.App.4th 359, 368 (2007); see In re Tobacco II Cases, 46 Cal. 4th 298, 326
12 (2009) (In a class action case, “[A] presumption, or at least an inference, of P.C.
,
IRM 13 reliance arises wherever there is a showing that a misrepresentation was material” F AW
L 14 only to named plaintiffs, and not to all class members. Thus, only a named 15 plaintiff is required to show that “the defendant’s misrepresentation is an LARKSON Los Angeles, CA 90069 CA Angeles, Los C 16 9255 Sunset Blvd., Suite 804 Suite Blvd., 9255 Sunset ‘immediate cause’ of the plaintiff’s conduct.”); Vasquez, 4 Cal. 3d at 814 (“[I]f 17 the trial court finds material misrepresentations were made to the class members, 18 at least an inference of reliance would arise as to the entire class.”) 19 Plaintiff is one of numerous consumers who materially relied on the 20 Products’ packaging to their detriment as confirmed by the 21 22 23 24 According to Plaintiff’s 25 marketing expert, Dr. Forrest Morgeson, consumers of perishable low-priced 26 products are less likely to complain to the manufacturer of the products, despite 27 15 Defendant et in discovery bates stamped TRC 3 28 during the Class Period regarding . 11 PLAINTIFF’S MEMORANDUM OF POINTS AND AUTHORITIES Case 2:17-cv-02664-DSF-MRW Document 77-1 Filed 03/05/18 Page 17 of 28 Page ID #:1508
1 being misled and damaged. Morgeson Decl. Ex. B ¶¶ 6-16. In fact, “[R]esearch 2 has indicated that only one dissatisfied customer in 20 – or only 5% of unhappy 3 customers – formally complain (Downton 2002; TARP 1986).” Id. ¶ 6. 4 5 do not accurately depict the true number of 6 consumers who considered the Products’ packaging size and the amount of 7 nonfunctional slack-fill therein material—the actual number likely is more than 8 20 times greater. Id. 9 According to Dr. Morgeson, consumers rely on the size of the Products’ 10 packaging and consider it material to their purchasing decisions.16 Dr. Morgeson 11 also confirms that consumers rely on the size of a product’s packaging to
12 accurately reflect the amount of product therein and would not expect P.C.
,
IRM 13 nonfunctional slack-fill. Id. In fact, Plaintiff’s experts found that consumers on F AW
L 14 average expect the Products to be filled 67% based on the size of the Products’ 15 box.17 However, the actual fill level is significantly less. For instance, the volume LARKSON Los Angeles, CA 90069 CA Angeles, Los C 16 18 9255 Sunset Blvd., Suite 804 Suite Blvd., 9255 Sunset of candy in a 3.5-oz box of Junior Mints is only 38.7%. This establishes that 17 consumers are deceived by the Products’ size because they receive at least 30% 18 less then what they expect to receive. Id.; Morgeson Decl. Ex. B ¶ 18. 19 20
21 16 Morgeson Decl. Ex. B ¶ 18 (“Specifically, consumers have consistently been found to rely on the dominant human sense (vision) and “visual heuristics” to 22 estimate the expected volume of a product (a process that, to complete accurately, would require measurement instruments and geometry), and more particularly to 23 assume that a product will have a larger volume if a package is taller (height) and/or elongated (Folkes and Matta 2004; Raghubir and Krishna 1999). 24 Moreover, consumers expect package size to accurately represent the quantity of the good being purchased. In a recent study highly applicable to the current 25 context – focused on similar consumer goods (chocolate confections) in a similar market (the United Kingdom) – researchers found that “slack fill” was generally 26 not something consumers knew about prior to experiencing it (Wilkins et al. 2016).”); see Lenzo Decl. Ex. B ¶¶ 22-23, 25, 67. 27 17 Lenzo Decl. Ex. B ¶¶ 23, 97. 18 Sand Decl. Ex. B p.29, Tbl. 12 (The actual slack-fill in 3.5-oz box of Junior 28 Mints is 61.3%. The actual volume of product in the box is calculated by subtracting .613 from 1). 12 PLAINTIFF’S MEMORANDUM OF POINTS AND AUTHORITIES Case 2:17-cv-02664-DSF-MRW Document 77-1 Filed 03/05/18 Page 18 of 28 Page ID #:1509
1 Moreover, through Plaintiff’s economist and conjoint analysis experts, 2 Plaintiff has already proven that the oversized packaging and nonfunctional slack- 3 fill within the Products constitutes a material misrepresentation to the Class.19 4 Defendant sold each of the Products, respectively, in uniformly oversized, opaque 5 packaging which includes substantial nonfunctional slack-fill.20 Plaintiff and class 6 members expected more candy than they received.21 7 This material misrepresentation (and deception) was consistent across 8 California throughout the Class Period.22 Accordingly, the claims of all class 9 members “stem from the same source.” Hanlon, 150 F.3d at 1019-1120. As a 10 result, certifying this case as a class action “will generate common answers apt to 11 drive the resolution of the litigation” and address questions common to Plaintiff
12 and the Class. Wal-Mart Stores, 131 S. Ct. at 2551. For instance, increasing the P.C.
,
IRM 13 number of candy pieces in the Products’ boxes, shrinking the size of the boxes, or F AW
L 14 adding features to the packaging would help eliminate consumer deception and 15 unlawful, nonfunctional slack-fill contained therein and, in turn, resolve questions LARKSON Los Angeles, CA 90069 CA Angeles, Los C 16 9255 Sunset Blvd., Suite 804 Suite Blvd., 9255 Sunset common to Plaintiff and the Class. 17 Claims under the UCL, FAL, and CLRA are ideal for class certification 18 because they will not require the court to investigate “class members’ individual 19 interaction with the product.” Bruno v. Quten Research Inst., LLC, 280 F.R.D. 20 19 See Lenzo Decl. Ex. B ¶¶ 22-23 (Based on a survey of 3,788 participants, 21 “[w]hen showing respondents a box of candy, three out of four consumers expect a fill-level that exceeds the box’s actual fill-level.”); Id. ¶ 67 (“As box size 22 increases, the consumer expects to receive a larger amount of the product, thereby increasing the likelihood of the product being purchased (citing Biran Wansink, 23 “Can Package Size Accelerate Usage Volume?” Journal of Marketing 60 (1996), p. 3.)); Id. ¶ 25 (“…[C]onsumers prefer candy that have higher fill-levels even 24 when other product attributes such as price or amount are fully specified and kept constant. . . . [I]nforming consumers that a box of candy is less than full at the 25 point of sale would reduce the willingness to buy.”) 20 Dr. Sand identifies the percentage of nonfunctional slack-fill in the Products and 26 determines that the slack-fill in the Products is substantially nonfunctional based on a detailed analysis of the six exceptions to functional slack-fill pursuant to 21 27 CFR 100.100 and Cal. Bus. and Prof. Code Section 12606.2. See Sand Decl. Ex. B pp. 28-50. 28 21 Lenzo Decl. Ex. B ¶ 23. 22 RJC Decl. Ex. 2 (Yetman Tr.) at 63:7-65:16, 68:18-69:14,71:1-18; 122: 2-10. 13 PLAINTIFF’S MEMORANDUM OF POINTS AND AUTHORITIES Case 2:17-cv-02664-DSF-MRW Document 77-1 Filed 03/05/18 Page 19 of 28 Page ID #:1510
1 524, 535 (C.D. Cal. 2011); Yumul v. Smart Balance, Inc., 733 F.Supp.2d 1117, 2 1125 (C.D. Cal. 2010) (“California courts have held that reasonable reliance is not 3 an element of claims under the UCL, FAL, and CLRA.”). For this reason, district 4 courts in California routinely certify consumer class actions arising from alleged 5 violations of the UCL, FAL, and CLRA.23 Therefore, because Plaintiff relied on 6 Defendant’s Product packaging in making her purchase, then that reliance is true 7 of all Class members, thereby satisfying the commonality requirement.24 8 According to the Ninth Circuit, another way to establish material 9 misrepresentations is to show “the maker of the representation knows or has 10 reason to know that its recipient regards or is likely to regard the matter as 11 important in determining his choice of action.” Hinojos v. Kohl’s Corp., 718 F.3d
12 1098, 1107 (9th Cir. 2013). Here, Defendant is well aware of consumers’ reliance P.C.
,
IRM 13 on packaging size when making their purchasing decisions—in fact, Defendant F
AW 25
L 14 markets the Products on this basis. Defendant admits that it uses 15 LARKSON Los Angeles, CA 90069 CA Angeles, Los C 16 9255 Sunset Blvd., Suite 804 Suite Blvd., 9255 Sunset 23 See e.g., Keegan v. Am. Honda Motor Co., Inc., 284 F.R.D. 504 (C.D. Cal. 17 2012) (certifying “a California UCL/CLRA class of purchasers” of vehicles); Bruno v. Eckhart Corp., 280 F.R.D. 540, 547 (C.D.Cal.2012) (denying 18 reconsideration of class certified under California’s UCL, FAL, and CLRA); Chavez v. Blue Sky Natural Beverage Co., 268 F.R.D. 365, 375–80 19 (N.D.Cal.2010) (Walker, J.) (certifying class under California’s CLRA and UCL). 24 Gordon Decl. ¶¶ 12, 13 (“I was misled by the size of the box and lost money 20 because I did not receive the amount of candy I expected based on the size of the box. In reliance upon Defendant’s false, misleading, and deceptive Product 21 packaging, I lost money that I would otherwise have not spent.”) 25 See RJC Decl. Ex. 4 (Modaff Tr.) at 65:11-66:15 (“Q. 22
23
24
25
26
27 28
14 PLAINTIFF’S MEMORANDUM OF POINTS AND AUTHORITIES Case 2:17-cv-02664-DSF-MRW Document 77-1 Filed 03/05/18 Page 20 of 28 Page ID #:1511
1 Id. Defendant further states that 2 Id. In sum, Defendant knowingly 3 uses larger boxes to increase shelf impression and lure unsuspecting consumers 4 with the promise of more candy than they receive. Id.; Morgeson Decl. Ex. B ¶ 5 18. 6 3. Typicality 7 The typicality requirement looks to whether “the claims of the class 8 representatives [are] typical of those of the class, and [is] ‘satisfied when each 9 class member’s claim arises from the same course of events, and each class 10 member makes similar legal arguments to prove the defendant’s liability.’” 11 Armstrong v. Davis, 275 F.3d 849, 868 (9th Cir. 2001). “Like the commonality
12 requirement, the typicality requirement is ‘permissive’ and requires only that the P.C.
,
IRM 13 representative’s claims are ‘reasonably co-extensive’ with those of absent class F AW
L 14 members; they need not be substantially identical.” Hanlon, 150 F.3d at 1020. In 15 other words, typicality is established where the class was injured through an LARKSON Los Angeles, CA 90069 CA Angeles, Los C 16 9255 Sunset Blvd., Suite 804 Suite Blvd., 9255 Sunset alleged common practice. Id.; California Rural Legal Assistance, Inc. v. Legal 17 Servs. Corp., 917 F.2d 1171, 1175 (9th Cir. 1990). Plaintiff need only show that 18 defendant made a misrepresentation or engaged in an unfair practice that was 19 typical across the class, and that plaintiff and class members were injured. See 20 Astiana v. Kashi Co., 291 F.R.D. 493, 502 (S.D. Cal. 2013) (“Defendant argues 21 that the differences in Plaintiffs’ perceptions and knowledge about Kashi 22 products, as well as differences in their preferences and reasons for purchasing 23 Kashi products, render them atypical of the proposed classes. ‘In determining 24 whether typicality is met, the focus should be ‘on the defendants’ conduct and the 25 plaintiffs’ legal theory,’ not the injury caused to the plaintiff.’”) (internal citation 26 omitted). 27 Typicality is satisfied here. Plaintiff and the Class’ claims are based on 28 Defendant’s uniform misrepresentations and unlawful conduct in packaging its
15 PLAINTIFF’S MEMORANDUM OF POINTS AND AUTHORITIES Case 2:17-cv-02664-DSF-MRW Document 77-1 Filed 03/05/18 Page 21 of 28 Page ID #:1512
1 Products in oversized, opaque cardboard boxes containing the same amount of 2 nonfunctional slack-fill.26 Accordingly, Defendant’s misleading packaging 3 towards Plaintiff “typifies” its conduct towards the Class. Thus, Plaintiff and all 4 Class members were equally damaged as a result of Defendant’s conduct.27 5 Additionally, Plaintiff’s expectations are typical of the Class as it relates to the 6 amount of expected slack-fill in the Products. See Gordon Tr. at 132: 22-25; 7 133:1-4 (“Q: So when you bought the Junior Mints box, did you expect there to 8 be any empty space in the box? A: Yeah, of course, a little bit, so the candy could 9 . . . not melt together, but I would have expected, like, this much (indicating) . . . 10 not half full.”); see Lenzo Decl. Ex. B ¶ 23. Therefore, since the issues in this case 11 arise from the same course of conduct that gives rise to claims of other class
12 members and the claims are based on the same legal theory, Plaintiff’s claims are P.C.
,
IRM 13 typical. Lozano v. AT&T Wireless Servs., 504 F.3d 718, 721 (9th Cir. 2007). F AW
L 14 4. Adequate Representation 15 The adequacy of representation requirement set forth in Rule 23(a)(4) LARKSON Los Angeles, CA 90069 CA Angeles, Los C 16 9255 Sunset Blvd., Suite 804 Suite Blvd., 9255 Sunset involves a two-part inquiry: “(1) do the named plaintiff and [her] counsel have 17 any conflicts of interest with other class members and (2) will the named plaintiff 18 and [her] counsel prosecute the action vigorously on behalf of the class?” Hanlon, 19 150 F.3d at 1020. “Adequate representation depends on, among other factors, an 20 absence of antagonism between representatives and absentees, and a sharing of 21 interest between representatives and absentees.” Ellis v. Costco Wholesale Corp., 22 657 F.3d 970, 985 (9th Cir. 2011). 23 The interests of Plaintiff and the Class are fully aligned in determining 24 whether Defendant deceived reasonable consumers with its oversized Product 25 packaging and confirming that said packaging contains nonfunctional slack-fill. 26
27 26 RJC Decl. Ex. 2 (Yetman Tr.) at 63:7-65:16, 68:18-69:14,71:1-18; 73: 2-18; 74:1-2, 13-24; 75:1-6, 13-17; 122: 2-10. 28 27 Sand Decl. Ex. B at pp. 28-50; Lenzo Decl. Ex. B ¶ 27; see deposition transcript of Ketrina Gordon (“Gordon Tr.”) at 132:15-19, RJC Decl. Ex. 6. 16 PLAINTIFF’S MEMORANDUM OF POINTS AND AUTHORITIES Case 2:17-cv-02664-DSF-MRW Document 77-1 Filed 03/05/18 Page 22 of 28 Page ID #:1513
1 Plaintiff has worked with her counsel and fully understands the responsibilities 2 and obligations that go along with serving as class representative in this matter. 3 Gordon Decl. ¶ 14. To date, Plaintiff has actively participated in every step of this 4 case, responding to discovery, reviewing relevant documents, and preparing for 5 and attending deposition. Id. Further, Plaintiff retained counsel with significant 6 experience in prosecuting large consumer fraud class actions, who should also be 7 appointed Class Counsel. See firm resume, attached as Ex. 7 to RJC Decl. 8 Therefore, the adequacy requirement is satisfied here. 9 B. THE REQUIREMENTS OF RULE 23(b)(2) ARE SATISFIED. 10 In addition to the prerequisites set forth in Rule 23(a), Plaintiff must meet 11 one of the types of classes under Rule 23(b).28 Under Rule 23(b)(2), “[a] class
12 action may be maintained if Rule 23(a) is satisfied and if…the party opposing the P.C.
,
IRM 13 class has acted or refused to act on grounds that apply generally to the class, so F AW
L 14 that final injunctive relief or corresponding declaratory relief is appropriate 15 respecting the class as a whole.” Fed. R. Civ. P. 23(b)(2). LARKSON Los Angeles, CA 90069 CA Angeles, Los C 16 9255 Sunset Blvd., Suite 804 Suite Blvd., 9255 Sunset Here, Plaintiff’s request for injunctive relief would uniformly prohibit 17 Defendant’s practice of selling oversized, opaque Product packaging containing 18 nonfunctional slack-fill. Further, the fix is simple: shrink the box, fill the box, or 19 add additional features to the box that eliminate the consumer deception. The 20
21 28 Plaintiff contends that she meets the requirements of both Rules 23(b)(2) and 22 (b)(3). Indeed, Plaintiff’s economist and conjoint analysis experts have already 23 prepared a report which demonstrates reliable methodologies to prove classwide damages. See Lenzo Decl. Ex. B. However, this motion is limited to certification 24 of an injunctive relief only class under Rule 23(b)(2) because Plaintiff’s primary 25 motivation for bringing this class action was to correct Defendant’s unlawful packaging. RJC Decl. Ex. 6 (Gordon Tr.) at 220:6-14 (“Q: It doesn’t matter to you 26 whether you get any money out of this lawsuit, is what you’re saying? . . . A: I 27 don’t care about any money.”) Plaintiff reserves her right to seek leave of Court, 28 should she establish liability on the merits, to try damages on a classwide basis under Rule 23(b)(3). 17 PLAINTIFF’S MEMORANDUM OF POINTS AND AUTHORITIES Case 2:17-cv-02664-DSF-MRW Document 77-1 Filed 03/05/18 Page 23 of 28 Page ID #:1514
1 requested injunctive relief is indivisible and will benefit all Class members, thus 2 making Rule 23(b)(2) certification appropriate.
3 1. Plaintiff Has Article III Standing. 4 “[S]tanding requires that (1) the plaintiff suffered an injury in fact ... (2) the 5 injury is fairly traceable to the challenged conduct, and (3) the injury is likely to 6 be redressed by a favorable decision.” Mazza v. Am. Honda Motor Co., 666 F.3d 7 581, 594-95 (9th Cir. 2012) (quoting Bates v. United Parcel Svc., Inc., 511 F.3d 8 974, 985 (9th Cir. 2007)). Although there was a split29 in the Ninth Circuit as to 9 when Article III standing is satisfied to award injunctive relief, two recent Ninth 10 Circuit cases, Davidson and Bigelow, work in tandem to help resolve this split and 11 confirm that Plaintiff has standing to seek injunctive relief under Rule 23(b)(2).
12 Davidson v. Kimberly-Clark Corp., 873 F.3d 1103, 1116 (9th Cir. 2017); Victor v. P.C.
,
IRM 13 R.C. Bigelow, Inc., (“Bigelow”) 708 F. App’x 333 (9th Cir. 2017). F AW
L 14 In Davidson, the plaintiff filed a false advertising suit seeking injunctive 15 relief under the UCL, CLRA, and FAL against a defendant who advertised that its LARKSON Los Angeles, CA 90069 CA Angeles, Los C 16 9255 Sunset Blvd., Suite 804 Suite Blvd., 9255 Sunset wipes were “flushable” when they actually were not. Davidson, 873 F.3d 1103. 17 The court looked to plaintiff’s allegations to determine whether she had Article III 18 standing to seek injunctive relief. Id. The court noted that, “Davidson alleged that 19 she ‘continues to desire to purchase wipes that are suitable for disposal in a 20 household toilet’; ‘would purchase truly flushable wipes manufactured by 21 [Kimberly-Clark] if it were possible’; ‘regularly visits stores… where [Kimberly- 22 Clark’s] ‘flushable’ wipes are sold’; and is continually presented with Kimberly- 23 Clark’s flushable wipes packaging but has ‘no way of determining whether the 24 representation ‘flushable’ is in fact true.’” Id. at 1116. The court held that it is 25
26 29 See Pinon v. Tristar Prods., Inc., No. 1:16-cv-00331-DAD-SAB, 2016 WL 4548766, at *4 (E.D. Cal. Sept. 1, 2016) (“The Ninth Circuit has not addressed 27 the specific question…[and] district courts within this circuit are divided about whether a plaintiff seeking to bring injunctive relief claims over deceptive 28 labeling can establish Article III standing once they are already aware of an alleged misrepresentation.”). 18 PLAINTIFF’S MEMORANDUM OF POINTS AND AUTHORITIES Case 2:17-cv-02664-DSF-MRW Document 77-1 Filed 03/05/18 Page 24 of 28 Page ID #:1515
1 “required at this stage of the proceedings to presume the truth of plaintiff’s 2 allegations and to construe all of the allegations in her favor” and ruled “that 3 Davidson’s allegation that she has ‘no way of determining whether the 4 representation ‘flushable’ is in fact true’ when she ‘regularly visits stores …where 5 Defendants’ ‘flushable’ wipes are sold’ constitutes a ‘threatened injury [that is] 6 certainly impending,’ thereby establishing Article III standing to assert a claim for 7 injunctive relief.” Id. 8 Bigelow expands on Davidson. There, the plaintiffs asserted causes of 9 actions under the UCL, FAL, and CLRA seeking injunctive relief because 10 defendant allegedly mislabeled its tea products by including phrases like “healthy 11 antioxidants.”30 However, the court held that the plaintiffs do not have standing to
12 seek injunctive relief because they do not face a threat of future harm. Victor, 708 P.C.
,
IRM 13 F. App’x at 334. The court’s holding was based on plaintiffs only buying F AW
L 14 “Bigelow tea again only if they receive an injunction first” and that “[t]hey will 15 not consider purchasing even those teas with updated packaging that they LARKSON Los Angeles, CA 90069 CA Angeles, Los C 16 9255 Sunset Blvd., Suite 804 Suite Blvd., 9255 Sunset acknowledge is accurate and resolves their concerns” (emphasis added). Id. 17 Accordingly, “[b]ecause they will not consider buying even properly labeled tea 18 until they receive an injunction, [plaintiffs] will not be harmed by wondering if 19 the tea is still mislabeled or by buying the tea without knowing if it is still 20 mislabeled. [Plaintiffs] do not face a real or immediate risk of being harmed again 21 in the same manner and so lack Article III standing to seek injunctive relief.” Id. 22 This case mirrors Davidson and is inapposite to Bigelow. Here, Plaintiff 23 purchased the Product at the movies to share with her friends; she has seen 24 Defendant’s Products on sale at the movies many times before. Gordon Decl. ¶¶ 25 4, 5, 8. Plaintiff was misled by the size of the Product’s opaque packaging and 26
27 30 See Victor v. R.C. Bigelow, Inc., No. 13-cv-02976-WHO, 2016 U.S. Dist. LEXIS 115845, at *1 (N.D. Cal. Aug. 29, 2016); Khasin v. R. C. Bigelow, Inc., 28 No. 12-cv-02204-WHO, 2016 U.S. Dist. LEXIS 115850, at *1 (N.D. Cal. Aug. 29, 2016). 19 PLAINTIFF’S MEMORANDUM OF POINTS AND AUTHORITIES Case 2:17-cv-02664-DSF-MRW Document 77-1 Filed 03/05/18 Page 25 of 28 Page ID #:1516
1 was economically injured because she did not receive an amount of candy she 2 expected to receive based on the size of the packaging. Id. ¶¶ 9-12. Plaintiff 3 further states the opposite of the Bigelow plaintiffs: that she foresees purchasing 4 the Products to share with her friends in the future but will not know how much 5 empty space is in the opaque packaging, let alone how much of that space is 6 nonfunctional, by just looking at the packaging alone and will always have to 7 wonder whether the package is filled with candy commensurate to the size of the 8 box. Id. ¶ 13. This mirrors the plaintiff in Davidson who wants to purchase the 9 wipes but has “no way of determining whether the representation ‘flushable’ is in 10 fact true” when she “regularly visits stores…where Defendants’ ‘flushable’ wipes 11 are sold.” Davidson, 873 F.3d at 1116. Therefore, as in Davidson, and unlike in
12 Bigelow, Plaintiff faces a “real or immediate risk of being harmed again” because P.C.
,
IRM 13 she has no way of knowing the amount of slack-fill in Defendant’s Products from F AW
L 14 the Products’ opaque packaging until she purchases and opens the Product, and 15 therefore, a “threatened injury [is] certainly impending.” Id.; Victor, 708 F. App’x LARKSON Los Angeles, CA 90069 CA Angeles, Los C 16 31 9255 Sunset Blvd., Suite 804 Suite Blvd., 9255 Sunset at 334. Thus, in line with the Ninth Circuit and the objective of California’s 17 consumer protection laws, Plaintiff has Article III standing for injunctive relief.
18 2. Plaintiff and the Class Complain of Standardized Uniform Conduct Applicable to the Entire Class. 19 The Ninth Circuit has held that for a Rule 23(b)(2) class to be certified, it is 20 sufficient if class members complain of a practice that is generally applicable to 21 the class as a whole. Walters, 145 F.3d at 1047 (9th Cir. 1998); see 7A Charles 22
23 31 “Were injunctive relief unavailable to a consumer who learns after purchasing a product that the product’s label is false, California’s consumer protection laws 24 would be effectively gutted, as defendants could remove any such case. Machlan, 77 F. Supp. 3d at 961. As the district court in Machlan explained, by finding that 25 these plaintiffs fail to allege Article III standing for injunctive relief, we risk creating a ‘perpetual loop’ of plaintiffs filing their state law consumer protection 26 claims in California state court, defendants removing the case to federal court, and the federal court dismissing the injunctive relief claims for failure to meet Article 27 III’s standing requirements. Id. On our Article III standing analysis, fully supported for the reasons we have explained by established standing principles, 28 this ‘perpetual loop’ will not occur.” Davidson v. Kimberly-Clark Corp., 873 F.3d 1103, 1115-16 (9th Cir. 2017) 20 PLAINTIFF’S MEMORANDUM OF POINTS AND AUTHORITIES Case 2:17-cv-02664-DSF-MRW Document 77-1 Filed 03/05/18 Page 26 of 28 Page ID #:1517
1 Alan Wright, et al., Federal Practice & Procedure § 1775 (2d ed. 1986) (“All the 2 class members need not be aggrieved by or desire to challenge the defendant’s 3 conduct in order for some of them to seek relief under Rule 23(b)(2).”); In re 4 Yahoo Mail Litigation 308 F.R.D. 577, 599 (N.D. Cal. 2015). 5 Here, Defendant’s conduct is standardized and mechanized.32 Indeed, 6 Defendant has been using the same machines to manufacture, fill, and enclose 7 each respective Product’s packaging during the Class Period.33 The process of 8 manufacturing each respective Product is the same to ensure weight and fill 9 consistency.34 Since Defendant’s machines fill each respective Product box to the 10 same uniform fill level, it would logically follow that it also does not fill the 11 Products above that level, leaving a uniform amount of functional slack-fill and
12 nonfunctional slack-fill therein. Accordingly, Plaintiff and Class members P.C.
,
IRM 13 complain of standard and uniform practice of unfair, unlawful, and deceptive F AW
L 14 conduct by Defendant that is generally applicable to the entire Class. 15 /// LARKSON Los Angeles, CA 90069 CA Angeles, Los C 16 9255 Sunset Blvd., Suite 804 Suite Blvd., 9255 Sunset ///
17
18 32 RJC Decl. Ex. 2 (Yetman Tr.) at 68:18-69:14 (“Q:
19
20
21 Yetman Tr.) at 58:15-59:6; 84: 18-24; 85:4-10, 20-23 o 22 23 24 an Tr.) at 63:7-65:16; 71:1-18 (“Q:
25 26 27
28
PLAINTIFF’S MEMORANDUM OF POINTS AND AUTHORITIES Case 2:17-cv-02664-DSF-MRW Document 77-1 Filed 03/05/18 Page 27 of 28 Page ID #:1518
1 3. Plaintiff Seeks Injunctive Relief That Would Benefit the Class. 2 “The key to the (b)(2) class is ‘the indivisible nature of the injunctive . . . 3 remedy warranted—the notion that the conduct is such that it can be enjoined or 4 declared unlawful only as to all of the class members or as to none of them.’” 5 Wal-Mart Stores, 131 S. Ct. at 2557 (citation omitted). “In other words, Rule 6 23(b)(2) applies only when a single injunction or declaratory judgment would 7 provide relief to each member of the class.” Id.; Delarosa v. Boiron, Inc., 275 8 F.R.D. 582, 591-92 (C.D. Cal. 2011) (Rule 23(b)(2) class certified because 9 commonality as to representations about medicine’s efficacy and an injunction 10 prohibiting same would “provide relief to each member of the class”) (citing Wal- 11 Mart, 131 S.Ct. at 2557); see also, Ries v. Arizona Beverages USA, 2012 WL
12 5975247, at *17-18 (granting (b)(2) certification of UCL and CLRA claims where P.C.
,
IRM 13 class sought injunctive relief to rectify false advertising on product packaging). F AW
L 14 Plaintiff seeks injunctive relief prohibiting Defendant from continuing to 15 engage in deceptive, unlawful, and unfair practices by adding candy to, or LARKSON Los Angeles, CA 90069 CA Angeles, Los C 16 9255 Sunset Blvd., Suite 804 Suite Blvd., 9255 Sunset shrinking, the box, or adding features to the box to eliminate the deception due to 17 nonfunctional slack-fill. Plaintiff also seeks punitive damages which are 18 sufficiently “incidental” and do not turn on the individual circumstances of Class 19 members. Ries, 287 F.R.D. at 541. Such equitable relief will benefit all. 20 Lastly, Defendant is capable of adding more candy or changing the 21 dimensions and features of its Products’ packaging to eliminate the deception 22 caused by nonfunctional slack-fill. See RJC Decl. Ex. 2 (Yetman Tr.) at 60:12- 23 61:16, 78:21-79:1- 21; 89:18-24. In fact, Defendant admits that all 24 25 26 Id. Thus, injunctive relief is necessary to prevent any 27 future harm to consumers who purchase the Products. Absent injunctive relief, 28 Defendant will continue to sell its deceptively packaged Products with impunity.
22 PLAINTIFF’S MEMORANDUM OF POINTS AND AUTHORITIES Case 2:17-cv-02664-DSF-MRW Document 77-1 Filed 03/05/18 Page 28 of 28 Page ID #:1519
1 As confirmed by the court in Cruz v. PacifiCare Health Systems, Inc., 30 Cal.4th 2 303 (2003), the statutory remedies available for violations of the CLRA, UCL, 3 and FAL include public injunctive relief, i.e., injunctive relief that has the primary 4 purpose and effect of prohibiting unlawful acts that threaten future injury to the 5 general public. Id. at 315-16. Therefore, certification pursuant to Rule 23(b)(2) is 6 appropriate and necessary here. 7 VI. CONCLUSION 8 For the foregoing reasons, Plaintiff respectfully requests that this Honorable 9 Court GRANT her motion for class certification. 10
11
DATED: March 5, 2018 CLARKSON LAW FIRM, P.C.
12 P.C.
, /s/ Ryan J. Clarkson______
IRM 13
F Ryan J. Clarkson, Esq.
AW Shireen M. Clarkson, Esq.
L 14 Bahar Sodaify, Esq. 15 LARKSON Los Angeles, CA 90069 CA Angeles, Los C 16 Counsel for Plaintiff 9255 Sunset Blvd., Suite 804 Suite Blvd., 9255 Sunset 17 18 19 20 21 22 23 24 25 26 27 28
23 PLAINTIFF’S MEMORANDUM OF POINTS AND AUTHORITIES Case 2:17-cv-02664-DSF-MRW Document 77-2 Filed 03/05/18 Page 1 of 3 Page ID #:1520
1 CLARKSON LAW FIRM, P.C. Ryan J. Clarkson (SBN 257074) 2 [email protected] Shireen M. Clarkson (SBN 237882) 3 [email protected] Bahar Sodaify (SBN 289730) 4 [email protected] 9255 Sunset Blvd., Ste. 804 5 Los Angeles, CA 90069 Tel: (213) 788-4050 6 Fax: (213) 788-4070
7 Attorneys for Plaintiff Ketrina Gordon
8
9 IN THE UNITED STATES DISTRICT COURT
10 FOR THE CENTRAL DISTRICT OF CALIFORNIA
11
12 KETRINA GORDON, individually and ) Case No. 2:17-cv-02664-DSF-MRW on behalf of all others similarly ) 13 situated, ) [CLASS ACTION] )
14 Plaintiff, ) DECLARATION OF RYAN J. ) CLARKSON IN SUPPORT OF 15 vs. ) PLAINTIFF’S MOTION FOR ) CLASS CERTIFICATION
Los Angeles, CA 90069 CA Angeles, Los TOOTSIE ROLL INDUSTRIES, INC., ) Clarkson Law Firm, P.C. 16 9255 Sunset Blvd, Ste. 804 Ste. Blvd, 9255 Sunset and DOES 1 through 10, inclusive, ) REDACTED VERSION OF 17 ) DOCUMENT PROPOSED TO BE Defendants. ) FILED UNDER SEAL 18 ) ) Hon. Dale S. Fischer 19 ) ) Action filed: February 10, 2017 20 ) ) Hearing Date: May 14, 2018 21 ) Hearing Time: 1:30 pm ) Hearing Location: 7D 22 ) ) 23 ) 24 25 26 27 28
DECLARATION OF RYAN J. CLARKSON Case 2:17-cv-02664-DSF-MRW Document 77-2 Filed 03/05/18 Page 2 of 3 Page ID #:1521
1 DECLARATION OF RYAN J. CLARKSON 2 I, Ryan J. Clarkson, declare as follows: 3 1. I am the managing attorney at Clarkson Law Firm, P.C. (“CLF”) and 4 counsel of record for named Plaintiff Ketrina Gordon (“Plaintiff”). I am licensed to 5 practice in all state and federal courts in the State of California, and I am a member 6 in good standing of the State Bar of California. I have personal knowledge of the 7 facts set forth in this declaration and, if called as a witness, I could and would testify 8 competently thereto. 9 2. I make this declaration in support of Plaintiff’s motion for class 10 certification. 11 3. Prior to filing her complaint, Plaintiff provided notice to Defendant
12 pursuant to Civil Code Section 1782(a). 13 4. Plaintiff’s Second Amended Complaint avers that the amount of
14 nonfunctional slack-fill contained in each of the Products is 45%. However, where 15 that number differs from Plaintiff’s expert in packaging design engineering, Dr. Los Angeles, CA 90069 CA Angeles, Los Clarkson Law Firm, P.C. 9255 Sunset Blvd, Ste. 804 Ste. Blvd, 9255 Sunset 16 Claire Sand, Plaintiff defers to Dr. Sand’s calculations. Plaintiff shall amend the 17 pleadings to conform to the evidence, if and/or when necessary. 18 5. The parties have engaged in substantial discovery. 19 6. On January 4, 2018, Defendant deposed Plaintiff. 20 7. Attached hereto as Exhibit 6 is a true and correct copy of relevant 21 excerpts of Plaintiff Ketrina Gordon’s deposition transcript. 22 8. On January 17-19, 2018, Plaintiff traveled to Chicago, Illinois to take 23 Defendant’s Rule 30(b)(6) depositions. 24 9. Attached hereto as Exhibit 1 is a true and correct copy of relevant 25 excerpts of Barry Bowen’s deposition transcript. 26 10. Attached hereto as Exhibit 2 is a true and correct copy of relevant 27 excerpts of Paula Yetman’s deposition transcript. 28 1 DECLARATION OF RYAN J. CLARKSON Case 2:17-cv-02664-DSF-MRW Document 77-2 Filed 03/05/18 Page 3 of 3 Page ID #:1522
1 11. Attached hereto as Exhibit 3 is a true and correct copy of relevant 2 excerpts of Charles Gordon Brown’s deposition transcript. 3 12. On February 15-16, 2018, Plaintiff traveled to Boston, Massachusetts to 4 take additional depositions of Defendant’s fact witnesses. 5 13. Attached hereto as Exhibit 4 is a true and correct copy of relevant 6 excerpts of Stephen Modaff’s deposition transcript. 7 14. Discovery is ongoing as to retail sales. 8 15. Attached hereto as Exhibit 5 is a true and correct copy of Defendant’s 9 Second Supplemental Responses served on November 10, 2017, in response to 10 Plaintiff’s Special Interrogatories, Set One. 11 16. Defendant produced a spreadsheet in discovery bates stamped
12 TRCA_0004263 detailing the regarding in the 13 Products received during the Class Period (the “Class Period” is February 10, 2013
14 through the present). 15 17. Attached hereto as Exhibit 7 is a true and correct copy of Clarkson Law Los Angeles, CA 90069 CA Angeles, Los Clarkson Law Firm, P.C. 9255 Sunset Blvd, Ste. 804 Ste. Blvd, 9255 Sunset 16 Firm, P.C.’s resume. 17 I declare under penalty of perjury under the laws of the United States and the 18 State of California that the foregoing is true and correct. Executed on March 5, 2018 19 at Los Angeles, California. 20
21 Ryan J. Clarkson 22 23 24 25 26 27 28 2 DECLARATION OF RYAN J. CLARKSON Case 2:17-cv-02664-DSF-MRW Document 77-3 Filed 03/05/18 Page 1 of 4 Page ID #:1523
EXHIBIT 1 [REDACTED VERSION PROPOSED TO BE FILED UNDER SEAL] Case 2:17-cv-02664-DSF-MRW Document 77-3 Filed 03/05/18 Page 2 of 4 Page ID #:1524 $WNLQVRQ%DNHU&RXUW5HSRUWHUV ZZZGHSRFRP
1 IN THE UNITED STATES DISTRICT COURT FOR THE CENTRAL DISTRICT OF CALIFORNIA 2
3 KETRINA GORDON, individually ) and on behalf of all others ) 4 similarly situated, ) ) 5 Plaintiff, ) ) 6 vs. ) No. 2017-cv-02664 ) 7 TOOTSIE ROLL INDUSTRIES, ) INC., and DOES 1 through 10, ) Hon. Dale S. Fischer 8 inclusive, ) ) 9 Defendants. )
10
11 CONFIDENTIAL
12 SUBJECT TO PROTECTIVE ORDER
13 VOLUME ONE
14 The 30(b)(6) videotaped deposition of
15 TOOTSIE ROLL INDUSTRIES,INC., by and through
16 BARRY PATRICK BOWEN, taken in the above-entitled
17 cause, pursuant to notice, reported by Deena Cothard,
18 CSR, at 101 West Grand Avenue, Chicago, Illinois, on
19 January 18, 2018, at the hour of 3:53 p.m.
20
21 ATKINSON BAKER, INC. COURT REPORTERS 22 (800) 288-3376 www.depo.com 23 REPORTED BY: Deena Cothard FILE NO.: AC00001 24
1 E %DUU\3DWULFN%RZHQ&RQILGHQWLDO -DQXDU\ Case 2:17-cv-02664-DSF-MRW Document 77-3 Filed 03/05/18 Page 3 of 4 Page ID #:1525 $WNLQVRQ%DNHU&RXUW5HSRUWHUV ZZZGHSRFRP
1 A At least, and then if we were to change 16:34
2 pricing at some point during the year, that would be 16:34
3 revised. But we, typically, don't change pricing 16:34
4 very often. 16:34
5 Q Is the price bulletin different than the 16:34
6 national price list, or do you use -- 16:34
7 A Same thing. 16:34
8 Q And those price lists cover the products at 16:34
9 issue? 16:34
10 A That's correct. 16:35
11 Q Does Tootsie Roll have suggested retail 16:35
12 prices for the products at issue? 16:35
37 E %DUU\3DWULFN%RZHQ&RQILGHQWLDO -DQXDU\ Case 2:17-cv-02664-DSF-MRW Document 77-3 Filed 03/05/18 Page 4 of 4 Page ID #:1526 $WNLQVRQ%DNHU&RXUW5HSRUWHUV ZZZGHSRFRP
15 Q Uh-huh. 16:47
21 Q Do you know what Tootsie Roll's annual 16:48
22 sales are roughly? 16:48
16:48
46 E %DUU\3DWULFN%RZHQ&RQILGHQWLDO -DQXDU\ Case 2:17-cv-02664-DSF-MRW Document 77-4 Filed 03/05/18 Page 1 of 12 Page ID #:1527
EXHIBIT 2 [REDACTED VERSION PROPOSED TO BE FILED UNDER SEAL] Case 2:17-cv-02664-DSF-MRW Document 77-4 Filed 03/05/18 Page 2 of 12 Page ID #:1528 Atkinson-Baker Court Reporters www.depo.com
·1· · · · · · IN THE UNITED STATES DISTRICT COURT · · · · · · ·FOR THE CENTRAL DISTRICT OF CALIFORNIA ·2
·3· ·KETRINA GORDON, individually ) · · ·and on behalf of all others· ) ·4· ·similarly situated,· · ) · · · · · · · · · · · · · · · · · ) ·5· · · · · · ·Plaintiff,· · · · ·) · · · · · · · · · · · · · · · · · ) ·6· · · · vs.· · · · · · · · · · ·)· No. 2017-cv-02664 · · · · · · · · · · · · · · · · · ) ·7· ·TOOTSIE ROLL INDUSTRIES,· · ·) · · ·INC., and DOES 1 through 10, )· Hon. Dale S. Fischer ·8· ·inclusive,· · · · · · · · · ·) · · · · · · · · · · · · · · · · · ) ·9· · · · · · ·Defendants.· · · · )
10
11· · · · · · · · · · · CONFIDENTIAL
12· · · · · · · · ·SUBJECT TO PROTECTIVE ORDER
13· · · · · · ·The 30(b)(6) videotaped deposition of
14· ·TOOTSIE ROLL INDUSTRIES, INC., by and through
15· ·PAULA YETMAN, taken in the above-entitled cause,
16· ·pursuant to notice, reported by Deena Cothard, CSR,
17· ·at 101 West Grand Avenue Chicago, Illinois, on
18· ·January 18, 2018, at the hour of 10:11 a.m.
19
20
21· ·ATKINSON BAKER, INC. · · ·COURT REPORTERS 22· ·(800) 288-3376 · · ·www.depo.com 23· ·REPORTED BY: Deena Cothard · · ·FILE NO.:· AC00001 24
Paula Yetman January 18, 2018 1 Case 2:17-cv-02664-DSF-MRW Document 77-4 Filed 03/05/18 Page 3 of 12 Page ID #:1529 Atkinson-Baker Court Reporters www.depo.com
·1· · · · A· · We call them two point -- machine 2.2. 11:39 ·2· ·2.1.· 4-1 and 4-2. 11:39 ·3· · · · Q· · The two machines that the Junior Mints 11:39 ·4· ·products we have been discussing today, which 11:39 ·5· ·machines that you just identified -- strike that. 11:39 ·6· · · · · · ·Which machines were used to manufacture the 11:39 ·7· ·Junior Mints boxed candy products? 11:39 ·8· · · · · · ·Is it machine 2.1 and 2.2? Or -- 11:39 ·9· · · · A· · It is 2.1 and 2.2, yes, but all of the 11:39 10· ·Junior Mint products?· Are you talking about the 11:39 11· ·3.5 ounce? 11:39 12· · · · Q· · Let's focus on the 3.5 ounce box: 11:40 13· · · · · · ·Which machine or machines at 11:40 14· ·810 Main Street have been used to manufacture the 11:40 15· ·3.5 ounce boxes of Junior Mints? 11:40 16· · · · A· · Line 2.1 and line 2.2. 11:40 17· · · · Q· · Which machines have been used to 11:40 18· ·manufacture the 4 ounce box of Junior Mints? 11:40 19· · · · A· · 2.1.· 2.2. 11:40 20· · · · Q· · Which machines have been used to 11:40 21· ·manufacture the 3 ounce boxes of Junior Mints? 11:40 22· · · · A· · Primarily, 2.1. 11:40 23· · · · Q· · Which machines have been used to 11:40 24· ·manufacture the 2.6 ounce box of Junior Mints? 11:40
Paula Yetman
January 18, 2018 60YVer1f Case 2:17-cv-02664-DSF-MRW Document 77-4 Filed 03/05/18 Page 4 of 12 Page ID #:1530 Atkinson-Baker Court Reporters www.depo.com
·1· · · · A· · 2.1. 11:40 ·2· · · · Q· · Which machines have been used to 11:40 ·3· ·manufacture the 4.13 ounce box of Junior Mints? 11:41 ·4· · · · A· · 2.2.· 2.1. 11:41 ·5· · · · Q· · Which machines have been used to 11:41 ·6· ·manufacture the 12 ounce box of Junior Mints? 11:41 ·7· · · · A· · Primarily, 2.1. 11:41 ·8· · · · Q· · Which machines have been used to 11:41 ·9· ·manufacture the 10.5 ounce box of Junior Mints? 11:41 10· · · · A· · 2.1. 11:41 11· · · · Q· · Which machines have been used to 11:41 12· ·manufacture the 1.84 ounce box of Junior Mints? 11:41 13· · · · A· · 2.1. 11:41 14· · · · Q· · Which machines have been used to 11:41 15· ·manufacture the 4.75 ounce box of Junior Mints? 11:41 16· · · · A· · 2.2 and 2.1. 11:41 17· · · · Q· · What are machines 4.1 and 4.2 used to 11:41 18· ·manufacture? 11:41 19· · · · A· · They, primarily, package -- 4.1, primarily, 11:42 20· ·packages Charleston Chews and Junior Caramels. 11:42 21· · · · · · ·4.2 is, primarily, dedicated to 11:42 22· ·Sugar Babies. 11:42 23· · · · Q· · Any others for 2.2?· I'm sorry. 11:42 24· · · · · · ·Other than Sugar Babies does machine 4.2 11:42
Paula Yetman
January 18, 2018 61YVer1f Case 2:17-cv-02664-DSF-MRW Document 77-4 Filed 03/05/18 Page 5 of 12 Page ID #:1531 Atkinson-Baker Court Reporters www.depo.com
·1· ·for purposes of consistency from one box to another; 11:51 ·2· ·is that correct? 11:51 ·3· · · · · · ·MR. JOLLEY:· Objection; asked and answered. 11:51 ·4· · · · · · ·THE WITNESS:· I don't know -- I don't know 11:51 ·5· ·how to answer that question. 11:51 ·6· · · · · · ·The machine works on a series of cams that 11:51 ·7· ·takes these funnels, inserts -- inserts them into the 11:51 ·8· ·box, and depending on the condition of the equipment, 11:51 ·9· ·how well it's running, it might go a half an inch. 11:51 10· ·It might go less.· But it meets -- it goes into the 11:52 11· ·box to prevent the candy from -- preventing it from 11:52 12· ·not entering the box or jumping out or bouncing out. 11:52 13· ·BY MR. CLARKSON: 11:52 14· · · · Q· · Is the machine calibrated to never insert 11:52 15· ·itself more than a half an inch into the box? 11:52 16· · · · A· · I don't know.· I don't know that for a 11:52 17· ·fact.· I'm sure it is designed to a certain distance. 11:52 18· · · · Q· · And the expectation is -- this is an 11:52 19· ·automated process, correct? 11:52 20· · · · A· · Yes. 11:52 21· · · · Q· · How many boxes are being filled per minute 11:52 22· ·on this machine? 11:52 11:52 24· · · · Q· · So this is a very fast process? 11:52
Paula Yetman
January 18, 2018 68YVer1f Case 2:17-cv-02664-DSF-MRW Document 77-4 Filed 03/05/18 Page 6 of 12 Page ID #:1532 Atkinson-Baker Court Reporters www.depo.com
·1· · · · A· · Yes, it is. 11:52 ·2· · · · Q· · It is a high-speed filling machine you are 11:52 ·3· ·talking about, correct? 11:52 ·4· · · · A· · That is what it is called. 11:52 ·5· · · · Q· · It is actually called a, "high-speed 11:52 ·6· ·filling machine"? 11:52 ·7· · · · A· · Yes. 11:52 ·8· · · · Q· · So the high-speed filling machine is 11:52 ·9· ·calibrated to be consistent in terms of the amount of 11:52 10· ·candy it puts into the -- into each box from one box 11:52 11· ·to another? 11:52 12· · · · · · ·MR. JOLLEY:· Objection; asked and 11:53 13· ·answered. 11:53 14· · · · · · ·THE WITNESS:· Yes. 11:53 15· ·BY MR. CLARKSON: 11:53 16· · · · Q· · You testified that there could be some 11:53 17· ·variation depending on whether the machine has 11:53 18· ·undergone maintenance, wear and tear, and that sort 11:53 19· ·of thing; is that right? 11:53 11:53 11:53 22· · · · Q· · How often do the machines get maintained to 11:53 23· ·ensure consistency in performance? 11:53 24· · · · A· · We do preventive maintenance once a week 11:53
Paula Yetman
January 18, 2018 69YVer1f Case 2:17-cv-02664-DSF-MRW Document 77-4 Filed 03/05/18 Page 7 of 12 Page ID #:1533 Atkinson-Baker Court Reporters www.depo.com
·1· · · · Q· · So the machines are checked and verified to 11:54 ·2· ·insert 3.5 ounces minimum into every box; is that 11:55 ·3· ·right? 11:55 ·4· · · · A· · The scale directs how much. 11:55 ·5· · · · · · ·I failed to say in the process of the 11:55 ·6· ·description of how the boxes, each box goes over -- 11:55 ·7· ·it goes through a metal detector, and it goes over a 11:55 ·8· ·check weigher.· If it is under weight, it is kicked 11:55 ·9· ·off. 11:55 10· · · · Q· · If the -- so your testimony is if the box 11:55 11· ·is underfilled, then it will be flagged and removed 11:55 12· ·from the production line? 11:55 13· · · · · · ·MR. JOLLEY:· Objection; vague and ambiguous 11:55 14· ·as to, "underfilled." 11:55 15· · · · · · ·THE WITNESS:· If it does not meet the 11:55 16· ·specifications on what the machine is set up for, 11:55 17· ·3.5 ounce, the check weigher will automatically blow 11:55 18· ·it off. 11:55 19· ·BY MR. CLARKSON: 11:55 20· · · · Q· · Is there variation in -- well, let me back 11:56 21· ·up. 11:56 22· · · · · · ·So with a 3.5 ounce box of Junior Mints, 11:56 23· ·the machine, the high-speed filling machines, are 11:56 24· ·calibrated to insert, at least, 3.5 ounces of 11:56
Paula Yetman
January 18, 2018 71YVer1f Case 2:17-cv-02664-DSF-MRW Document 77-4 Filed 03/05/18 Page 8 of 12 Page ID #:1534 Atkinson-Baker Court Reporters www.depo.com
12:00 ·2· · · · · · ·MR. JOLLEY:· Same objections. 12:00 12:00 12:00 12:00 12:00 ·7· ·BY MR. CLARKSON: 12:00 ·8· · · · Q· · So Tootsie Roll -- I may use, "Tootsie 12:00 ·9· ·Roll," instead of, "Tootsie Roll Industries, Inc.," 12:00 10· ·just for purposes of efficiency and abbreviation. 12:00 11· · · · · · ·Is that okay? 12:00 12· · · · A· · That's fine. 12:00 13· · · · Q· · So Tootsie Roll has some checks and 12:00 14· ·balances to make sure that consumers are not getting 12:00 15· ·less than the promised 3.5 ounces of candy in a 3.5 12:01 16· ·ounce box of Junior Mints, right? 12:01 17· · · · A· · That is correct. 12:01 18· · · · Q· · Does Tootsie Roll also have checks and 12:01 19· ·balances to make sure that it's not including more 12:01 20· ·than -- well, let me back up a second. 12:01 21· · · · · · ·You testified that to account for some 12:01 22· ·slight differences in fill levels -- let me strike 12:01 23· ·that and ask it a different way. 12:01 24· · · · · · ·Does Tootsie Roll have checks and balances 12:01
Paula Yetman
January 18, 2018 75YVer1f Case 2:17-cv-02664-DSF-MRW Document 77-4 Filed 03/05/18 Page 9 of 12 Page ID #:1535 Atkinson-Baker Court Reporters www.depo.com
·1· · · · A· · Yes. 12:04 ·2· · · · Q· · And is that held at 810 Main Street in 12:04 ·3· ·Cambridge? 12:04 ·4· · · · A· · Yes. 12:04 ·5· · · · Q· · And that package order would identify for 12:04 ·6· ·all of the Junior Mints boxed candy products and all 12:04 ·7· ·the Sugar Babies boxed candy products, the criteria 12:04 ·8· ·for kicking off the manufacturing line in either 12:05 ·9· ·underfilled or overfilled boxed candy product; is 12:05 10· ·that right? 12:05 11· · · · A· · Yes. 12:05 12· · · · Q· · Other than at the point -- turning back to 12:05 13· ·the machine; machines used to fill the 3.5 ounce 12:05 14· ·boxes -- other than at the point of fill, is there 12:05 15· ·any other time during the packaging process that a 12:06 16· ·piece of machinery is inserted into the box itself? 12:06 17· · · · A· · No. 12:06 18· · · · Q· · Is the machine that is used to fill the 12:06 19· ·6 ounce box of Sugar Babies -- strike that.· I will 12:06 20· ·come back to that later. 12:07 21· · · · · · ·Presently, Tootsie Roll is manufacturing on 12:07 22· ·the machine 2.1 and 2.2 several different weights of 12:07 23· ·Junior Mints boxed candy products, correct? 12:07 24· · · · A· · That's correct. 12:07
Paula Yetman
January 18, 2018 78YVer1f Case 2:17-cv-02664-DSF-MRW Document 77-4 Filed 03/05/18 Page 10 of 12 Page ID #:1536 Atkinson-Baker Court Reporters www.depo.com
·1· · · · Q· · Can you describe the process for converting 12:07 ·2· ·the line to produce, say, a 3.5 ounce box of 12:08 ·3· ·Junior Mints to a 4.13 ounce box of Junior Mints? 12:08 ·4· · · · · · ·What does that process involve? 12:08 ·5· · · · A· · Depending on the size of the box, the 12:08 ·6· ·pockets would have to change that hold it.· The rails 12:08 ·7· ·would change with the dimension.· The scale settings 12:08 ·8· ·would have to change.· Check weigher settings would 12:08 ·9· ·have to change. 12:08 10· · · · · · ·The glue -- the glue application would have 12:08 11· ·to change based on the pattern of the glue for the 12:08 12· ·individual box. 12:08 13· · · · Q· · What about the calibration of the filling 12:08 14· ·portion of it that protrudes into the box?· Does that 12:08 15· ·change, or is that always the same from one box to 12:08 16· ·the next? 12:08 17· · · · A· · Well, there's a program for each box on the 12:09 18· ·sheet of scale and on the Z machine or the cartoning 12:09 19· ·machine.· So the mechanic will have to set up that 12:09 20· ·line for that program, and then it will adjust the 12:09 21· ·equipment to that size box. 12:09 22· · · · Q· · With the 3.5 ounce box of Junior Mints, you 12:09 23· ·mentioned that -- well, what is the name of the 12:09 24· ·portion of the machine that inserts itself into the 12:09
Paula Yetman
January 18, 2018 79YVer1f Case 2:17-cv-02664-DSF-MRW Document 77-4 Filed 03/05/18 Page 11 of 12 Page ID #:1537 Atkinson-Baker Court Reporters www.depo.com
·1· · · · · · ·MR. CLARKSON:· It is 12:20. 12:20 ·2· · · · · · ·How are you guys feeling?· Do you guys want 12:20 ·3· ·to -- 12:20 ·4· · · · · · ·MR. JOLLEY:· We will break for lunch at 12:20 ·5· ·some point, but do you know how much time we have 12:20 ·6· ·left before the next witness? 12:21 ·7· · · · · · ·MR. CLARKSON:· Oh, yeah, so why -- 12:21 ·8· · · · · · ·THE COURT REPORTER:· Are we on the record? 12:21 ·9· ·Stay on? 12:21 10· · · · · · ·MR. CLARKSON:· Yeah, let's go off the 12:21 11· ·record for a second. 12:21 12· · · · · · ·THE VIDEOGRAPHER:· We are now off the 12:21 13· ·record.· The time is 12:21 p.m. 12:21 14· · · · · · · · · · · · · · · · (Off the record.) 12:21 15· · · · · · ·We are back on the record. 12:31 16· · · · · · ·The time is 12:31 p.m. 12:31 17· ·BY MR. CLARKSON: 12:31 18· · · · Q· · Ms. Yetman, you testified that there are 12:31 19· ·two machines dedicated to manufacture of boxed Junior 12:31 12:31 12:31 12:31 12:31 12:31
Paula Yetman
January 18, 2018 89YVer1f Case 2:17-cv-02664-DSF-MRW Document 77-4 Filed 03/05/18 Page 12 of 12 Page ID #:1538 Atkinson-Baker Court Reporters www.depo.com
·1· ·Sugar Babies boxed candy products? 13:07 ·2· · · · A· · That's correct. 13:07 13:07 13:07 13:07 ·6· · · · · · ·MR. JOLLEY:· Objection; misstates 13:07 ·7· ·testimony. 13:08 ·8· · · · · · ·THE WITNESS:· I didn't hear what you said. 13:08 ·9· · · · · · ·MR.· JOLLEY:· That was for her.· You can go 13:08 10· ·ahead and answer. 13:08 13:08 13:08 13:08 13:08 13:08 13:08 13:08 13:08 13:08 13:08 13:08 13:08 13:08 13:08
Paula Yetman
January 18, 2018 115YVer1f Case 2:17-cv-02664-DSF-MRW Document 77-5 Filed 03/05/18 Page 1 of 3 Page ID #:1539
EXHIBIT 3 Case 2:17-cv-02664-DSF-MRW Document 77-5 Filed 03/05/18 Page 2 of 3 Page ID #:1540 Atkinson-Baker Court Reporters www.depo.com
·1· · · · · · ·IN THE UNITED STATES DISTRICT COURT · · · · · · ·FOR THE CENTRAL DISTRICT OF CALIFORNIA ·2
·3· ·KETRINA GORDON, individually ) · · ·and on behalf of all others· ) ·4· ·similarly situated,· ·) · · · · · · · · · · · · · · · · · ) ·5· · · · · · ·Plaintiff,· · · · ·) · · · · · · · · · · · · · · · · · ) ·6· · · · vs.· · · · · · · · · · ·)· No. 2017-cv-02664 · · · · · · · · · · · · · · · · · ) ·7· ·TOOTSIE ROLL INDUSTRIES,· · ·) · · ·INC., and DOES 1 through 10, )· Hon. Dale S. Fischer ·8· ·inclusive,· · · · · · · · · ·) · · · · · · · · · · · · · · · · · ) ·9· · · · · · ·Defendants.· · · · )
10
11· · · · · · · · · · · CONFIDENTIAL
12· · · · · · · · · SUBJECT TO PROTECTIVE ORDER
13· · · · · · ·The 30(b)(6) videotaped deposition of
14· ·TOOTSIE ROLL INDUSTRIES, INC., by and through
15· ·CHARLES GORDON BROWN, taken in the above-entitled
16· ·cause, pursuant to notice, reported by Deena Cothard,
17· ·CSR, at 101 West Grand Avenue, Chicago, Illinois, on
18· ·January 19, 2018, at the hour of 12:21 p.m.
19
20
21· ·ATKINSON BAKER, INC. · · ·COURT REPORTERS 22· ·(800) 288-3376 · · ·www.depo.com 23· ·REPORTED BY: Deena Cothard · · ·FILE NO.:· AC00003 24
Charles Gordon Brown January 19, 2018 1 Case 2:17-cv-02664-DSF-MRW Document 77-5 Filed 03/05/18 Page 3 of 3 Page ID #:1541 Atkinson-Baker Court Reporters www.depo.com
·1· · · · A· · And in distribution, and in the consumers' 14:23 ·2· ·hands I'm assuming you mean. 14:23 ·3· · · · Q· · Correct, and those -- Tootsie Roll never -- 14:23 ·4· ·never evaluated those things, did they? 14:23 ·5· · · · · · ·MR. JOLLEY:· Objection; vague and ambiguous. 14:23 ·6· · · · · · ·THE WITNESS:· Well, you are kind of saying, 14:23 ·7· ·you know, that we got in a room and said, "All right, 14:24 ·8· ·team.· We are shooting for this headspace." 14:24 ·9· · · · · · ·That isn't how we do it.· The headspace is a 14:24 10· ·result.· It's not a cause.· And so when we have all 14:24 11· ·these factors that are involved in developing and 14:24 12· ·manufacturing packaging, distribution of a product, 14:24 13· ·there are certain things you have to do to meet the 14:24 14· ·price point of very competitive category. 14:24 15· · · · · · ·Protection; you got to protect the product. 14:24 16· ·Keep the machine speeds at a reasonable rate, which is 14:24 17· ·very fast.· You have to, you know, make sure that 14:24 18· ·there is enough, for example, space in the box for the 14:24 19· ·glue to be forced down and flat.· So there a lot of 14:24 20· ·these factors. 14:24 21· · · · · · ·You put those together.· You design a 14:24 22· ·product that meets your objectives in those ways, and 14:24 23· ·then I'll look at it and say, "This headspace in this 14:24 24· ·case is about 25 percent, give or take, and that is 14:24
Charles Gordon Brown
January 19, 2018 87YVer1f Case 2:17-cv-02664-DSF-MRW Document 77-6 Filed 03/05/18 Page 1 of 15 Page ID #:1542
EXHIBIT 4 Case 2:17-cv-02664-DSF-MRW Document 77-6 Filed 03/05/18 Page 2 of 15 Page ID #:1543 Atkinson-Baker Court Reporters www.depo.com
· · · · · · · · · · ·CONFIDENTIAL ·1· · · · ·IN THE UNITED STATES DISTRICT COURT
·2· · ·FOR THE CENTRAL DISTRICT OF CALIFORNIA
·3· · · · · · ·CA NO. 2:17-CV-02666-DSF-MRW
·4
·5· ·KETRINA GORDON, individually and on behalf of
·6· ·all others similarly situated,
·7· · · · · · · · · · · · · ·Plaintiff,
·8
·9· ·vs.
10· ·TOOTSIE ROLL INDUSTRIES, INC., and DOES 1 through
11· ·10, inclusive,
12· · · · · · · · · · · · · · Defendants.
13
14· · · · ·VIDEOTAPED DEPOSITION OF
15· · · · ·STEPHEN MODAFF
16· · · · ·Regus
17· · · · ·Eight Faneuil Hall Marketplace
18· · · · ·Boston, MA 02109
19· · · · ·February 16, 2018
20· · · · ·9:10 a.m.
21
22· ·AB Job# AC01582
23· ·Reported by: Lori J. Atkinson
24
Stephen Modaff February 16, 2018 1 Case 2:17-cv-02664-DSF-MRW Document 77-6 Filed 03/05/18 Page 3 of 15 Page ID #:1544 Atkinson-Baker Court Reporters www.depo.com
·1· · · · keep the length of the 3.5-ounce box of Junior 10:38:58 ·2· · · · Mints the same? 10:39:03 ·3· ·A.· ·Um-hmm. 10:39:03 ·4· ·Q.· ·Is there -- and you communicated a marketing 10:39:04 ·5· · · · reason, right?· You related to shelf space.· Do you 10:39:10 ·6· · · · recall that testimony? 10:39:13 ·7· ·A.· ·Yes. 10:39:14 ·8· ·Q.· ·Was there a similar marketing reason for the 10:39:14 ·9· · · · decision to reject the shorter smaller box? 10:39:18 10· ·A.· ·No. 10:39:23 11· ·Q.· ·Was there -- did you perceive any disadvantage to 10:39:23 12· · · · -- from a marketing perspective to having a shorter 10:39:31 13· · · · box? 10:39:35 14· ·A.· ·Not specifically a shorter box.· Just size in 10:39:38 15· · · · general, shelf impact, those types of things we 10:39:41 16· · · · consider.· But marketing wants the biggest package 10:39:45 17· · · · on any item. 10:39:50 18· ·Q.· ·Why is that? 10:39:51 19· ·A.· ·Again, for a lot of reasons. 10:39:52 20· ·Q.· ·Can you describe one reason? 10:39:54 21· ·A.· ·One reason would be shelf impression.· Shorter. 10:39:55 22· · · · Longer.· Specifically to this, my concern that I 10:40:01 23· · · · had stated was, you know, let's try to keep the 10:40:04 24· · · · length.· That wasn't just me dictating that.· We 10:40:08
Stephen Modaff
February 16, 2018 65YVer1f Case 2:17-cv-02664-DSF-MRW Document 77-6 Filed 03/05/18 Page 4 of 15 Page ID #:1545 Atkinson-Baker Court Reporters www.depo.com
·1· · · · looked at marketing and sales and retailers and 10:40:11 ·2· · · · everything. 10:40:16 ·3· ·Q.· ·That is shelving? 10:40:16 ·4· ·A.· ·We evaluate those things on any type of product. 10:40:18 ·5· ·Q.· ·What is shelf impression? 10:40:21 ·6· ·A.· ·Shelf impression I guess is the consumer 10:40:25 ·7· · · · impression when it sits on the shelf.· Not 10:40:30 ·8· · · · specifically related to design either -- to the 10:40:35 ·9· · · · size.· It relates to the art work and how it 10:40:40 10· · · · presents itself as well. 10:40:43 11· · · · · · · · · But my only guidance that I recall was 10:40:45 12· · · · just the length because it wasn't shelf impression. 10:40:48 13· · · · It was making sure that we didn't lose space or we 10:40:51 14· · · · took too much space and got kicked out.· Those 10:40:54 15· · · · types of things 10:40:58 16· · · · · · · · · Those are just my asks.· I don't recall 10:40:59 17· · · · control that.· I would not ask for certain 10:41:02 18· · · · dimensions and dictate that and say, No, we can't 10:41:05 19· · · · do this.· We can't do that.· Like this and any 10:41:07 20· · · · other item, I just say -- I just give my opinion. 10:41:11 21· ·Q.· ·Let's switch gears for one moment.· Where did you 10:41:16 22· · · · go to college? 10:41:23 23· ·A.· ·I went to Indiana University. 10:41:24 24· ·Q.· ·Hoosiers? 10:41:33
Stephen Modaff
February 16, 2018 66YVer1f Case 2:17-cv-02664-DSF-MRW Document 77-6 Filed 03/05/18 Page 5 of 15 Page ID #:1546 Atkinson-Baker Court Reporters www.depo.com
·1· · · · Same with the big box. 11:10:43 ·2· ·Q.· ·So the easy pour dispenser on the Dots and Junior 11:10:45 ·3· · · · Mints big box products was there as of December of 11:10:54 ·4· · · · 2014? 11:10:56 ·5· ·A.· ·Yes. 11:10:56 ·6· ·Q.· ·When was the decision made to add the easy pour 11:10:57 ·7· · · · feature to the 3.5-ounce box of Junior Mints? 11:11:02 ·8· ·A.· ·I think it was either around this time frame, March 11:11:06 ·9· · · · April. 11:11:11 10· ·Q.· ·March of 2017? 11:11:11 11· ·A.· ·Yes.· These are emails relating to that. 11:11:18 12· · · · I would 11:11:19 13· · · · say it would be around that time frame. 11:11:20 14· ·Q.· ·Is this -- was the use of the easy pour feature for 11:11:22 15· · · · the 3.5-ounce box of Junior Mints an idea that was 11:11:32 16· · · · conceived by the marketing department? 11:11:38 17· ·A.· ·You know what, I don't know the answer to that. I 11:11:44 18· · · · know that there are existing products so we looked 11:11:48 19· · · · at it before.· I know that previous brand managers 11:11:50 20· · · · had looked at it.· I don't know the reasons why we 11:11:55 21· · · · never, you know, added it at that time.· But I 11:11:58 22· · · · don't know who made the decision.· What time it was 11:12:02 23· · · · made.· Related to that question. 11:12:05 24· ·Q.· ·So it wasn't a decision you conceived -- strike 11:12:16
Stephen Modaff
February 16, 2018 86YVer1f Case 2:17-cv-02664-DSF-MRW Document 77-6 Filed 03/05/18 Page 6 of 15 Page ID #:1547 Atkinson-Baker Court Reporters www.depo.com
·1· · · · that. 11:12:16 ·2· · · · · · · · · Adding the easy pour feature to the 11:12:21 ·3· · · · 3.5-ounce box of Junior Mints was not an idea that 11:12:24 ·4· · · · you conceived; correct? 11:12:27 ·5· ·A.· ·Not me specifically.· Again, we do a lot of things -- 11:12:28 ·6· · · · as you've probably learned we do a lot of things 11:12:33 ·7· · · · collaboratively.· So we were looking at the theater 11:12:33 ·8· · · · box line and improvements that we could make to 11:12:38 ·9· · · · better educate the consumer and improve the consumer 11:12:41 10· · · · experience. 11:12:45 11· ·Q.· ·Were you involved in the decision to add the easy 11:12:45 12· · · · pour feature to the 3.5-ounce box of Junior Mints? 11:12:50 13· ·A.· ·Yes. 11:12:52 14· ·Q.· ·What was your involvement? 11:12:53 15· ·A.· ·It was talking about these ideas.· We had done it 11:12:58 16· · · · on a big box.· Can we do it on other boxes?· Along 11:13:01 17· · · · with some of these other improvements that we're 11:13:06 18· · · · making.· I know that we looked at it before.· Those 11:13:08 19· · · · types of things. 11:13:12 20· ·Q.· ·So tell me all the reasons that you decided -- that 11:13:14 21· · · · Tootsie Roll Industries decided to add the easy 11:13:20 22· · · · pour feature to the 3.5-ounce box of Junior Mints? 11:13:23 23· · · · · · · · · MR. JOLLEY:· Objection, to the extent 11:13:26 24· · · · it calls for speculation. 11:13:29
Stephen Modaff
February 16, 2018 87YVer1f Case 2:17-cv-02664-DSF-MRW Document 77-6 Filed 03/05/18 Page 7 of 15 Page ID #:1548 Atkinson-Baker Court Reporters www.depo.com
·1· ·A.· ·Right.· So what I am aware of, what I was involved 11:13:29 ·2· · · · with, was the consumer factor.· And then as we do 11:13:38 ·3· · · · with everything in our portfolio, we are always 11:13:46 ·4· · · · looking at the risk of litigation.· And so that was 11:13:49 ·5· · · · looked at as well.· But primarily what can we do to 11:13:53 ·6· · · · improve the consumer experience. 11:13:58 ·7· · · · · · · · · So I don't want to isolate that.· I know 11:14:00 ·8· · · · you are focused on that.· I don't want to isolate 11:14:01 ·9· · · · that because we made other improvements.· We had 11:14:03 10· · · · actual size.· ·We did some other things to the 11:14:05 11· · · · packaging.· But we felt that was -- or is at par 11:14:09 12· · · · with the industry and industry standards as far as 11:14:14 13· · · · communicating the best we can of what is inside the 11:14:16 14· · · · box.· To ensure -- as a marketer, I want to ensure 11:14:20 15· · · · that the consumer experiences goods.· Otherwise we 11:14:27 16· · · · don't have consumers.· This is a very big line for 11:14:29 17· · · · us.· So we looked at other ways to improve the 11:14:32 18· · · · consumer experience as well as, you know, make sure 11:14:33 19· · · · that we weren't -- you know, to mitigate litigation. 11:14:37 20· ·Q.· ·How did you believe adding the easy pour would 11:14:44 21· · · · assist in mitigating litigation? 11:14:47 22· ·A.· ·Just the risk factors from a consumer standpoint of 11:14:51 23· · · · crushing and the packaging and whatnot. 11:14:59 24· ·Q.· ·So I'm trying to understand -- I'm trying to 11:15:04
Stephen Modaff
February 16, 2018 88YVer1f Case 2:17-cv-02664-DSF-MRW Document 77-6 Filed 03/05/18 Page 8 of 15 Page ID #:1549 Atkinson-Baker Court Reporters www.depo.com
·1· · · · understand -- can you explain that one more time. 11:15:13 ·2· · · · You stated that one of the reasons that you added 11:15:15 ·3· · · · the easy pour feature is to mitigate against the 11:15:19 ·4· · · · risk of litigation.· I'm trying to understand how 11:15:24 ·5· · · · it would do that -- 11:15:25 ·6· ·A.· ·I'm sorry. 11:15:25 ·7· ·Q.· ·I'm trying to understand how you believe that 11:15:29 ·8· · · · adding the easy pour would assist in mitigating the 11:15:32 ·9· · · · risk of litigation? 11:15:36 10· ·A.· ·From my understanding -- respectfully, I wasn't 11:15:37 11· · · · involved in all the conversations.· But we were -- 11:15:40 12· · · · the litigious environment things going on with head 11:15:47 13· · · · space and whatnot and other companies and whatnot. 11:15:56 14· · · · We know we are not at fault with anything.· We 11:16:00 15· · · · don't have any issues related our packaging.· You 11:16:12 16· · · · always try to do things to help improve consumer 11:16:14 17· · · · education and consumer experience. 11:16:20 18· ·Q.· ·So you're aware that this lawsuit was filed in 11:16:22 19· · · · February of 2017; right? 11:16:28 20· ·A.· ·I don't know the specific date.· But sure. 11:16:30 21· ·Q.· ·But were you aware of the lawsuit at the time that 11:16:34 22· · · · the easy pour feature was conceived.· Were you? 11:16:36 23· ·A.· ·I'm sorry. Repeat the question. 11:16:38 24· ·Q.· ·You were aware of the lawsuit at the time that the 11:16:39
Stephen Modaff
February 16, 2018 89YVer1f Case 2:17-cv-02664-DSF-MRW Document 77-6 Filed 03/05/18 Page 9 of 15 Page ID #:1550 Atkinson-Baker Court Reporters www.depo.com
·1· · · · easy pour feature for the 3.5-ounce box of Junior 11:16:43 ·2· · · · Mints was conceived; correct? 11:16:44 ·3· ·A.· ·Yes. 11:16:47 ·4· · · · · · · · · MR. JOLLEY:· Objection, misstates 11:16:48 ·5· · · · facts. 11:16:50 ·6· ·Q.· ·Was the addition of the easy pour feature to the 11:16:57 ·7· · · · 3.5-ounce box of Junior Mints done in part in 11:17:01 ·8· · · · response to that lawsuit that was filed in this 11:17:04 ·9· · · · case? 11:17:08 10· ·A.· ·No. 11:17:08 11· ·Q.· ·What litigation was the company attempting to 11:17:10 12· · · · mitigate? 11:17:14 13· ·A.· ·Yes. 11:17:17 14· ·Q.· ·What litigation risk was the company attempting to 11:17:18 15· · · · mitigate by adding the easy pour feature? 11:17:21 16· · · · · · · · · MR. JOLLEY:· Objection.· To the extent 11:17:25 17· · · · that it calls for a legal conclusion. 11:17:27 18· · · · · · · · · Go ahead. 11:17:30 19· ·A.· ·Just a general risk of litigation. 11:17:30 20· ·Q.· ·You mentioned specifically a litigious environment? 11:17:33 21· ·A.· ·Yes. 11:17:42 22· ·Q.· ·And by "litigious environment," you mean with 11:17:42 23· · · · respect to slack fill related litigation; is that 11:17:49 24· · · · right? 11:17:53
Stephen Modaff
February 16, 2018 90YVer1f Case 2:17-cv-02664-DSF-MRW Document 77-6 Filed 03/05/18 Page 10 of 15 Page ID #:1551 Atkinson-Baker Court Reporters www.depo.com
·1· ·A.· ·Not specifically.· The part of this packaging and 11:17:54 ·2· · · · everything that we have to be aware of it.· That's 11:17:58 ·3· · · · why we do the checks and balances of designing 11:18:00 ·4· · · · packages the packages that fit the product and 11:18:04 ·5· · · · whatnot.· We are always -- it's not like just today 11:18:05 ·6· · · · we are in litigious environment.· We are a food 11:18:11 ·7· · · · company we are opened to all types of lawsuits. 11:18:13 ·8· · · · And we want to mitigate and we want to over 11:18:17 ·9· · · · communicate in the packaging to make sure that even 11:18:19 10· · · · though we felt we had the net weight on there, we 11:18:22 11· · · · had the piece count on the box that that was enough 11:18:25 12· · · · for the consumer to understand what is in the box, 11:18:29 13· · · · but -- seeing other -- 11:18:32 14· ·Q.· ·Did the legal department -- did the company's 11:18:36 15· · · · lawyers have input on addition of the easy pour 11:18:44 16· · · · feature in March of 2017? 11:18:47 17· · · · · · · · · MR. JOLLEY:· Objection to the extent 11:18:50 18· · · · it calls for privileged communications.· If you 11:18:53 19· · · · are needing to disclose communications from 11:18:54 20· · · · counsel providing legal advice to the company, I 11:18:57 21· · · · will instruct you not to answer. 11:19:01 22· · · · · · · · · THE WITNESS:· I'm not clear. 11:19:05 23· · · · · · · · · MR. JOLLEY: You can answer yes or no. 11:19:07 24· · · · But I don't want to you discuss the substance 11:19:09
Stephen Modaff
February 16, 2018 91YVer1f Case 2:17-cv-02664-DSF-MRW Document 77-6 Filed 03/05/18 Page 11 of 15 Page ID #:1552 Atkinson-Baker Court Reporters www.depo.com
·1· · · · to move the process as quick as possible to hit 11:26:35 ·2· · · · those packaging order cutoffs, so we wouldn't have 11:26:40 ·3· · · · packaging -- I want to say -- not fines but the 11:26:43 ·4· · · · board and different things like that that we can 11:26:48 ·5· · · · incur with our supplier.· That's why the supplier. 11:26:51 ·6· · · · The supplier directly, they are involved in that 11:26:52 ·7· · · · process as well to help us to move that along and 11:26:55 ·8· · · · try to mitigate additional costs for the transition 11:27:01 ·9· · · · into this packaging, to my knowledge. 11:27:06 10· ·Q.· ·When you say transition to this packaging, what 11:27:12 11· · · · packaging are you referring to? 11:27:23 12· ·A.· ·Into the updated packaging. 11:27:26 13· ·Q.· ·What updated packaging? 11:27:28 14· ·A.· ·The packaging with the additional copy and then the 11:27:31 15· · · · easy pour. 11:27:41 16· ·Q.· ·So was there going to be a change to the copy of 11:27:41 17· · · · the 3.5-ounce box of Junior Mints other than the 11:27:44 18· · · · easy pour feature? 11:27:48 19· ·A.· ·Was there going to be a change?· Involved with 11:27:50 20· · · · this? 11:27:51 21· ·Q.· ·Yes. 11:27:52 22· ·A.· ·Yes. 11:27:53 23· ·Q.· ·What changes were to be made? 11:27:53 24· ·A.· ·We added -- we added actual size.· We added piece 11:28:00
Stephen Modaff
February 16, 2018 97YVer1f Case 2:17-cv-02664-DSF-MRW Document 77-6 Filed 03/05/18 Page 12 of 15 Page ID #:1553 Atkinson-Baker Court Reporters www.depo.com
·1· · · · count.· And then we moved -- we already 11:28:06 ·2· · · · had product sold by weight not volume contents tend 11:28:12 ·3· · · · to settle after packaging.· We moved that to the 11:28:23 ·4· · · · front of the package.· Those all decided at once to 11:28:25 ·5· · · · improve consumer communication on these items and 11:28:33 ·6· · · · others, the theater boxes. 11:28:39 ·7· ·Q.· ·Why was the phrase "actual size" added to the 11:28:41 ·8· · · · packaging of the 3.5 ounce box of Junior Mints? 11:28:51 ·9· ·A.· ·Just to better communicate to the consumer.· That 11:28:51 10· · · · we may not be showing them the actual size.· Just 11:28:53 11· · · · to better communicate to the consumer.· Competitors 11:28:57 12· · · · are using it, too.· That is not the main reason. 11:29:01 13· · · · Looking at our packaging.· It was like -- we were 11:29:05 14· · · · communicating to them everything that we're doing 11:29:09 15· · · · is right.· What else can we do. 11:29:12 16· ·Q.· ·So you added -- the company added actual size, 11:29:16 17· · · · piece counts, and moved the disclaimer regarding 11:29:24 18· · · · contents settling to the front of the packaging? 11:29:31 19· ·A.· ·Yes. 11:29:34 20· ·Q.· ·All at the same time? 11:29:35 21· ·A.· ·Yes. 11:29:38 22· ·Q.· ·And also added an easy pour feature? 11:29:38 23· ·A.· ·Yes. 11:29:42 24· ·Q.· ·And at least with respect to the first three 11:29:44
Stephen Modaff
February 16, 2018 98YVer1f Case 2:17-cv-02664-DSF-MRW Document 77-6 Filed 03/05/18 Page 13 of 15 Page ID #:1554 Atkinson-Baker Court Reporters www.depo.com
·1· · · · changes, were those changes that were conceived of 11:29:49 ·2· · · · prior to addition of the easy pour feature or at 11:29:52 ·3· · · · the same time? 11:29:55 ·4· · · · · · · · · MR. JOLLEY:· Objection, compound. 11:29:56 ·5· · · · Objection to the extent it calls for speculation. 11:29:59 ·6· ·A.· ·Yeah, I don't know when those were conceived or what 11:30:00 ·7· · · · was thought about previous.· Don't know. 11:30:03 ·8· ·Q.· ·When the company decided to add the term actual 11:30:05 ·9· · · · size to the front of the 3.5-ounce box of Junior 11:30:10 10· · · · Mints, what specifically was the company attempting 11:30:16 11· · · · to better communicate to consumers? 11:30:20 12· · · · · · · · · MR. JOLLEY:· Objection to the extent 11:30:23 13· · · · it calls for speculation. 11:30:25 14· ·A.· ·In my opinion that the size -- the reason for 11:30:26 15· · · · putting actual size on any type of package is to 11:30:31 16· · · · make sure the consumer knows what is inside the -- 11:30:34 17· · · · the size of the product -- inside of the package. 11:30:39 18· ·Q.· ·The consumer can better understand how much candy 11:30:42 19· · · · is contained in the box; correct? 11:30:46 20· ·A.· ·Not specific to how much.· The size, what they 11:30:47 21· · · · should expect on the size of the candy. 11:30:50 22· ·Q.· ·And if the consumer understands the size of the 11:30:53 23· · · · candy, they can better understand how much the 11:30:56 24· · · · quantity of the candy contained therein; correct? 11:31:01
Stephen Modaff
February 16, 2018 99YVer1f Case 2:17-cv-02664-DSF-MRW Document 77-6 Filed 03/05/18 Page 14 of 15 Page ID #:1555 Atkinson-Baker Court Reporters www.depo.com
·1· · · · · · · · · MR. JOLLEY:· Objection, argumentative. 11:31:05 ·2· · · · Objection asked and answered. 11:31:09 ·3· ·A.· ·I would assume that would be logical from a 11:31:10 ·4· · · · consumer perspective, yes. 11:31:14 ·5· ·Q.· ·The same with respect to the term piece count -- 11:31:16 ·6· · · · I'm sorry.· Strike that. 11:31:19 ·7· · · · · · · · · So another addition that the company made 11:31:23 ·8· · · · in March of 2017 was to add a piece count? 11:31:24 ·9· ·A.· ·Yes. 11:31:29 10· ·Q.· ·Which prior to March of 2017 did not exist on the 11:31:30 11· · · · prior packaging, correct? 11:31:38 12· · · · · · · · · MR. JOLLEY:· Objection, misstates 11:31:39 13· · · · facts. 11:31:42 14· ·A.· ·You know what, I don't -- which package? 11:31:42 15· ·Q.· ·The 3.5-ounce box of Junior Mints? 11:31:46 16· ·A.· ·Yes.· Ask again, I apologize. 11:31:50 17· ·Q.· ·Prior to March of 2017, the 3.5-ounce box of Junior 11:31:51 18· · · · Mints, did it contain a piece count? 11:31:57 19· ·A.· ·No. 11:31:59 20· ·Q.· ·And prior to March of 2017, did the 3.5-ounce box 11:32:00 21· · · · of Junior Mints contains a reference to what the 11:32:04 22· · · · actual size of the candy is on the product 11:32:08 23· · · · packaging? 11:32:14 24· · · · · · · · · MR. JOLLEY:· I'll object to these 11:32:14
Stephen Modaff
February 16, 2018 100YVer1f Case 2:17-cv-02664-DSF-MRW Document 77-6 Filed 03/05/18 Page 15 of 15 Page ID #:1556 Atkinson-Baker Court Reporters www.depo.com
·1· · · · question.· The boxes will speak for themselves. 11:32:15 ·2· ·A.· ·Right.· No. 11:32:18 ·3· ·Q.· ·And you stated that there was a disclaimer about 11:32:20 ·4· · · · settling of contents located on the rear of the box 11:32:24 ·5· · · · prior to March of 2017; is that right? 11:32:28 ·6· ·A.· ·Yes. 11:32:31 ·7· ·Q.· ·Who conceived of the addition of the terms actual 11:32:52 ·8· · · · size, the addition of the piece count, and the 11:32:58 ·9· · · · change from the disclaimer regarding settling of 11:33:03 10· · · · contents located on the back of the package to the 11:33:07 11· · · · front of the package in March of 2017? 11:33:11 12· · · · · · · · · MR. JOLLEY:· Objection.· Compound. 11:33:13 13· · · · Objection assumes facts.· Objection to the extent 11:33:15 14· · · · it calls for speculation. 11:33:18 15· ·A.· ·Right. There was discussions about it.· So there 11:33:19 16· · · · was general ideas thrown out by me and other people 11:33:22 17· · · · involved in the conversation about improving the 11:33:25 18· · · · packaging with other people within marketing.· Just 11:33:29 19· · · · kind of a general, Hey, what else can we do to 11:33:33 20· · · · improve the packaging and better communicate 11:33:35 21· · · · · · · · · So we looked at competitive products.· We 11:33:38 22· · · · had actual size of some of the other items, that's 11:33:41 23· · · · good.· Why not do that?· That should help improve 11:33:44 24· · · · communication on these packages and all of our 11:33:47
Stephen Modaff
February 16, 2018 101YVer1f Case 2:17-cv-02664-DSF-MRW Document 77-7 Filed 03/05/18 Page 1 of 6 Page ID #:1557
EXHIBIT 5 [REDACTED VERSION PROPOSED TO BE FILED UNDER SEAL] Case 2:17-cv-02664-DSF-MRW Document 77-7 Filed 03/05/18 Page 2 of 6 Page ID #:1558
1 DAVID M. JOLLEY (SBN 191164) 2 Email: [email protected] ASHLEY SIMONSEN (SBN 275203) 3 Email: [email protected] 4 COVINGTON & BURLING LLP One Front Street 5 San Francisco, CA 94111-5356 6 Telephone: + 1 (415) 591-6000 Facsimile: + 1 (415) 591-6091 7 8 Attorneys for Defendant TOOTSIE ROLL INDUSTRIES, INC. 9 10 UNITED STATES DISTRICT COURT 11 FOR THE CENTRAL DISTRICT OF CALIFORNIA 12 WESTERN DIVISION 13 14 Civil Case No.: 2:17-cv-02664-DSF-MRW KETRINA GORDON, individually and
15 on behalf of all others similarly situated, DEFENDANT TOOTSIE ROLL’S
16 SECOND SUPPLEMENTAL Plaintiff, RESPONSES AND OBJECTIONS TO 17 PLAINTIFF’S SPECIAL v. 18 INTERROGATORIES, SET ONE (1)
19 TOOTSIE ROLL INDUSTRIES, INC., Initial Compl. filed: February 10, 2017 and DOES 1 through 10, inclusive, Initial Compl. served: March 10, 2017 20 Case removed: April 7, 2017
21 Defendants Judge: Hon. Dale S. Fischer 22 Courtroom: 7D 23 24 REQUESTING PARTY: PLAINTIFF KETRINA GORDON 25 RESPONDING PARTY: DEFENDANT TOOTSIE ROLL INDUSTRIES, INC. 26 SET NO.: ONE 27 Pursuant to Rule 33 of the Federal Rules of Civil Procedure, Defendant Tootsie 28 Roll Industries, Inc. (“Tootsie Roll”) hereby provides these second supplemental
DEFENDANT TOOTSIE ROLL’S SECOND SUPPLEMENTAL RESPONSES AND OBJECTIONS TO PLAINTIFF’S SPECIAL INTERROGATORIES, SET ONE (1) Case 2:17-cv-02664-DSF-MRW Document 77-7 Filed 03/05/18 Page 3 of 6 Page ID #:1559
1 SLACK-FILL, NONFUNCTIONAL SLACK-FILL, and LEVEL OF FILL? If so, then 2 please identify 3 (a) what changes were made; 4 (b) the date any changes were made; 5 (c) why the changes were made; 6 (d) who made the decision to make the changes; and 7 (e) any Documents which evidence (a) through (d) above. 8 RESPONSE: Tootsie Roll incorporates each of its General Objections into its 9 response as if set forth verbatim herein. Tootsie Roll further objects to this interrogatory 10 as vague, ambiguous, overbroad, and not proportional to the needs of the case in its use 11 of the phrase “concerning.” 12 Based on, subject to, and not waiving the preceding objections, 13 14 15 16 17 18 19 20 21 INTERROGATORY NO. 2: IDENTIFY each DOCUMENT consisting of a 22 product label, product packaging, print advertisement, internet advertisement, video 23 advertisement, television advertisement, or point-of-purchase display advertisement you 24 have disseminated to any member of the proposed class, i.e., all purchasers of the 25 PRODUCTS during the CLASS PERIOD, in connection with the PRODUCTS since 26 their launch. 27 RESPONSE: 28 6 DEFENDANT TOOTSIE ROLL’S SECOND SUPPLEMENTAL RESPONSES AND OBJECTIONS TO PLAINTIFF’S SPECIAL INTERROGATORIES, SET ONE (1) Case 2:17-cv-02664-DSF-MRW Document 77-7 Filed 03/05/18 Page 4 of 6 Page ID #:1560
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 INTERROGATORY NO. 3: For each DOCUMENT identified in Response to 27 Interrogatory No. 2, describe: 28 (a) when the advertisement was disseminated (i.e. date, time, and duration); and 7 DEFENDANT TOOTSIE ROLL’S SECOND SUPPLEMENTAL RESPONSES AND OBJECTIONS TO PLAINTIFF’S SPECIAL INTERROGATORIES, SET ONE (1) Case 2:17-cv-02664-DSF-MRW Document 77-7 Filed 03/05/18 Page 5 of 6 Page ID #:1561
1 (b) where geographically each advertisement was disseminated. 2 RESPONSE: 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 INTERROGATORY NO. 4: What are YOUR total gross and net revenues for 20 the sale of the PRODUCTS in California and the United States during the CLASS 21 PERIOD? 22 RESPONSE: 23 24 25 26 27 28 8 DEFENDANT TOOTSIE ROLL’S SECOND SUPPLEMENTAL RESPONSES AND OBJECTIONS TO PLAINTIFF’S SPECIAL INTERROGATORIES, SET ONE (1) Case 2:17-cv-02664-DSF-MRW Document 77-7 Filed 03/05/18 Page 6 of 6 Page ID #:1562
1 2 3 4 5 6 7 8 9 10 11 12
13 14
15 16 17 18
19
20
21
22
23 INTERROGATORY NO. 5: IDENTIFY the name, title, and contact information 24 of each person who assisted in the preparation of YOUR responses to Plaintiff’s First Set 25 of Special Interrogatories, Plaintiff’s First Set of Requests for Production, and Plaintiff’s 26 First Set of Requests for Admission. 27 28 9 DEFENDANT TOOTSIE ROLL’S SECOND SUPPLEMENTAL RESPONSES AND OBJECTIONS TO PLAINTIFF’S SPECIAL INTERROGATORIES, SET ONE (1) Case 2:17-cv-02664-DSF-MRW Document 77-8 Filed 03/05/18 Page 1 of 4 Page ID #:1563
EXHIBIT 6 Case 2:17-cv-02664-DSF-MRW Document 77-8 Filed 03/05/18 Page 2 of 4 Page ID #:1564
· · · · · · UNITED STATES DISTRICT COURT
· · · ·FOR THE CENTRAL DISTRICT OF CALIFORNIA
KETRINA GORDON, individually· ·) and on behalf of all others· · ) similarly situated,· · · · · · ) · · · · · · · · · · · · · · · ·) · · · · · Plaintiff,· · · · · ·) · · · · · · · · · · · · · · · ·) Case No. 2:17-cv- vs.· · · · · · · · · · · · · · ) 02664-DSF-MRW · · · · · · · · · · · · · · · ·) TOOTSIE ROLL INDUSTRIES, INC., ) and DOES 1 through 10,· · · · ·) inclusive,· · · · · · · · · · ·) · · · · · · · · · · · · · · · ·) · · · · · Defendants.· · · · · ) ______)
· · · · Videotaped Deposition of
KETRINA GORDON, taken on behalf of the
Defendant, at 1999 Avenue of the
Stars, 35th Floor, Los Angeles,
California, commencing at 9:22 a.m.,
on Thursday, January 4, 2018, before
Tami L. Le, CSR No. 8716, RPR.
Job: 24546 Case 2:17-cv-02664-DSF-MRW Document 77-8 Filed 03/05/18 Page 3 of 4 Page ID #:1565 KETRINA GORDON January 04, 2018
·1· ·paying for? ·2· · · · · · MR. CLARKSON:· Object to the form of the ·3· ·question, vague and ambiguous, confusing. ·4· · · · · · THE DEPONENT:· Do I need -- do you want an ·5· ·answer? ·6· · · ·Q· · BY MS. SIMONSEN:· Yes, I'd like you to -- ·7· · · · · · (Simultaneous speaking.) ·8· · · · · · MR. CLARKSON:· You can answer. ·9· · · ·Q· · BY MS. SIMONSEN:· -- answer the question. 10· · · ·A· · I thought I was paying for an entire box of 11· ·candy that would be filled. 12· · · ·Q· · So you thought you were paying for the 13· ·candy inside the box; right? 14· · · ·A· · Yes, that's, like, this big (indicating), 15· ·huge.· And I did not get what I expected, which 16· ·is -- like, when you have a huge box like this 17· ·(indicating) and there's only this much (indicating) 18· ·inside, that's pretty -- that's a huge, gigantic 19· ·difference in price and pay.· So I'm, like, okay, 20· ·I'll buy these three and we can all have a good 21· ·time, but no. 22· · · ·Q· · So when you bought the Junior Mints box, 23· ·did you expect there to be any empty space in the 24· ·box? 25· · · ·A· · Yeah, of course, a little bit, so the candy
First Legal [email protected] 132
L.A. 855.348.4997 YVer1f Case 2:17-cv-02664-DSF-MRW Document 77-8 Filed 03/05/18 Page 4 of 4 Page ID #:1566 KETRINA GORDON January 04, 2018
·1· · · ·A· · -- because it made me angry.· That's what ·2· ·made them angry because I was angry. ·3· · · ·Q· · Please let me finish my question -- ·4· · · ·A· · Oh, sorry. ·5· · · ·Q· · -- which you didn't again. ·6· · · · · · It doesn't matter to you whether you get ·7· ·any money out of this lawsuit, is what you're ·8· ·saying? ·9· · · · · · MR. CLARKSON:· Object to the form.· You 10· ·mean individually, personally? 11· · · · · · MS. SIMONSEN:· If she understands the 12· ·question, she can answer it. 13· · · · · · THE DEPONENT:· I don't care about any 14· ·money. 15· · · ·Q· · BY MS. SIMONSEN:· Okay. 16· · · ·A· · For me personally. 17· · · ·Q· · Okay.· All right.· Let's turn back to 18· ·Exhibit 4, the Second Amended Complaint, and please 19· ·turn to Page 3. 20· · · · · · Oh, it looks like you got my version of the 21· ·Complaint. 22· · · ·A· · Oh. 23· · · · · · MS. SIMONSEN:· I wonder if we should switch 24· ·that out since it's a highlighted copy. 25· · · · · · MR. CLARKSON:· Yeah, why don't you do that.
First Legal [email protected] 220
L.A. 855.348.4997 YVer1f Case 2:17-cv-02664-DSF-MRW Document 77-9 Filed 03/05/18 Page 1 of 5 Page ID #:1567
EXHIBIT 7 Case 2:17-cv-02664-DSF-MRW Document 77-9 Filed 03/05/18 Page 2 of 5 Page ID #:1568
Experience. Integrity. Results.
FIRM RESUME
Based out of Los Angeles, California, the lawyers of CLARKSON LAW FIRM, P.C. have represented plaintiffs and defendants throughout California and the United States. The lawyers at our firm have an active civil trial practice, having achieved substantial results on behalf of consumers and other plaintiffs throughout the state and country. Our most recent trial victory came in January 2014 in Rastegar v. Mid Century Insurance Company, in which Mr. Clarkson served as lead trial counsel and won a two-week jury trial defeating the billion-dollar insurance company on insurance bad faith claims.
The lawyers at our firm have an active class action practice and have won numerous appointments as class counsel to represent millions of class members. Our lawyers have obtained class settlements and certified numerous consumer classes pursuant to contested class certification motions and have served as Lead or Counsel or Co-Lead Counsel in:
• a California certified class action lawsuit against the world’s second largest food and beverage company for false advertising and mislabeling of food product as “natural cheese” before Hon. John D. Kronstadt (Morales, et al vs. Kraft Foods Group, Inc., U.S. District Court, Central District of California, Western Division, Case No. 2:14-cv- 04387-JAK-PJW);
• a California certified class action lawsuit on behalf of consumers against a major broadcast satellite provider for unlawful termination fees (Imburgia, et al vs. DirecTV Inc.,Los Angeles County Superior Court, Case No. BC398295);
• a California certified class action lawsuit against major pharmaceutical manufacturer for false advertising of the anti-depressant, Paxil (Grair vs. Johnson v. GlaxoSmithKline, Inc.,166 Cal. App. 4th 1497 (2009), Los Angeles County Superior Court, Case No. BC288536);
• a California certified class action lawsuit battling Labor Code violations against employer before Hon. Mel Red Recana (Penos vs. Zell, et al., Los Angeles County Superior Court, Case No. BC398686).
• A United States certified class action lawsuit against a major nutraceutical company for falsely advertising a popular weight loss supplement to millions of consumers before Hon. Anthony J. Mohr (Wally v. CCA Industries, Inc., Los Angeles County Superior Court Case No. BC422833)
• A United States certified class action lawsuit against a major nutraceutical company for falsely advertising a popular weight loss product to millions of consumers before Hon. Michael L. Stern
California www.clarksonlawfirm.com Michigan
Case 2:17-cv-02664-DSF-MRW Document 77-9 Filed 03/05/18 Page 3 of 5 Page ID #:1569
(Smart v. Obesity Research Insitute, LLC, et al., Los Angeles Superior Court Case No. BC407882/BC426780)
• A California certified class action against a major window manufacturer before Hon. Barry Goode (Pagano v. Weather Shield Mfg., Inc., et al., Contra Costa Superior Court Case No. C080060)
SHIREEN M. CLARKSON
Ms. Clarkson is a Shareholder of Clarkson Law Firm, P.C. Ms. Clarkson focuses her practice on consumer class actions in the areas of food labeling, pharmaceutical drugs, cosmetics, exercise gear, supplements, and other consumer products. Prior to joining Clarkson Law Firm, P.C., Ms. Clarkson was a senior associate at a prominent Southern California class action law firm where she exclusively litigated consumer class actions and mass torts cases against pharmaceutical companies, insurance carriers, food manufacturers, and other consumer manufacturers.
Ms. Clarkson is admitted to the State Bar of California as well as the bars of the United States District Courts for the Central, Northern, and Southern Districts of California.
Ms. Clarkson graduated from the University of California Hastings College of the Law in 2004. In 2000, Ms. Clarkson graduated with honors from University of California, Santa Barbara where she earned a B.A.
Representative Cases
• Morales, et al vs. Kraft Foods Group, Inc., U.S. District Court, Central District of California, Western Division, Case No. 2:14-cv- 04387-JAK-PJW – Ms. Clarkson filed this “natural” food labeling case while at her former law firm, Milstein Adelman LLP, where she and Ryan Clarkson, who was co-lead counsel at that time, led the case through class certification, granted by District Judge John A. Kronstadt on June 23, 2015. Thereafter, she joined Clarkson Law Firm, P.C. and continued to represent the Class with Ryan Clarkson, overcoming two stay motions based on impending FDA regulations – a feat which no other lawsuit in the country facing the same challenge was able to defeat – as well numerous other substantive motions, including a motion for summary judgment and motion to exclude plaintiffs’ damages expert report. The case is scheduled for trial in June 2017.
• Imburgia, et al vs. DirecTV Inc.,Los Angeles County Superior Court, Case No. BC398295 – Ms. Clarkson was actively involved in obtaining class certification of this matter involving unlawful termination fees against the satellite television giant, DirecTV, and was among the attorneys appointed as Co-Lead Class Counsel for the certified class. Most notably, Ms. Clarkson played an integral role in defeating DirecTV’s motion to compel arbitration following the United States Supreme Court’s 2011 decision in AT&T Mobility v. Concepcion – the only case in the nation to overcome Concepcion’s broad impact on consumer contracts with arbitration provisions. Ms. Clarkson participated in the further defeat of DirecTV’s appeal in the 9th Circuit. The decision was ultimately reversed by the United States Supreme Court, although Justices Thomas, Ginsburg, and Sotomayor filed dissents, consistent with plaintiffs’ position, writing that the majority's decision “again expanded the scope of the FAA, further degrading the rights of consumers and further insulating already powerful economic entities from liability for unlawful acts.”
Case 2:17-cv-02664-DSF-MRW Document 77-9 Filed 03/05/18 Page 4 of 5 Page ID #:1570
• Grair vs. Johnson v. GlaxoSmithKline, Inc.,166 Cal. App. 4th 1497 (2009), Los Angeles County Superior Court, Case No. BC288536 – While at her former law firm, Ms. Clarkson assisted in achieving a class settlement of over $3.5 million for a class of California consumers of the drug, Paxil. This was a hard-fought lawsuit that spanned over the course of 8 years. The settlement changed the general perception of sleeping pills which are no longer regarded as “non-habit forming” as falsely advertised by GlaxoSmithKline.
• Penos vs. Zell, et al., Los Angeles County Superior Court, Case No. BC398686 – Ms. Clarkson assisted in uncovering Labor Code violations on behalf of employees in this certified class action lawsuit. She was an integral part of the discovery, briefing and negotiations that ultimately led to a class action settlement of this matter, resulting in hundreds of thousands of dollars to the employee class.
RYAN J. CLARKSON
Mr. Clarkson is Managing Attorney of Clarkson Law Firm, P.C. Mr. Clarkson focuses his practice on consumer class and collective actions involving food misbranding, cosmetic mislabeling, defective pharmaceutical drugs and medical devices, and illegal employment practices. Prior to founding Clarkson Law Firm, P.C., Mr. Clarkson was a senior associate at the law firm of Milstein Adelman, LLP where he exclusively litigated consumer class actions against pharmaceutical companies, insurance carriers, food manufacturers, and other consumer manufacturers.
Mr. Clarkson is admitted to the State Bars of California and Michigan. He is also a member of the bars of the United States District Courts for the Central, Northern, Southern and Eastern Districts of California, the Eastern and Western Districts of Michigan, as well as the United States Court of Appeals for the Sixth and Ninth Circuits.
Mr. Clarkson graduated from Michigan State University School of Law, summa cum laude in 2005. In 1999, Mr. Clarkson graduated from the University of Michigan at Ann Arbor where he earned a B.A.
Mr. Clarkson is a member of the Board of Directors of the Los Angeles Trial Lawyers’ Charities as well as a member of the Consumer Attorneys of California, Consumers Attorneys Association of Los Angeles, and American Association for Justice.
Representative Cases
• Fluoroquinolone Antibiotic Cases – Mr. Clarkson was the first plaintiff attorney in the country to take on clients in connection with permanent and disabling nerve damage caused by Levaquin, Cipro, and Avelox manufactured by Johnson & Johnson and Bayer Pharmaceuticals. Mr. Clarkson represents dozens of clients across the country.
• Morales, et al vs. Kraft Foods Group, Inc., U.S. District Court, Central District of California, Western Division, Case No. 2:14-cv- 04387-JAK-PJW – Mr. Clarkson obtained class certification on behalf of a class of purchasers of a popular cheese product falsely advertised as “natural cheese” on June 23, 2015 by the Hon. John A. Kronstadt. Mr. Clarkson has overcome numerous dispositive motions. The case is scheduled for trial in June 2017.
Case 2:17-cv-02664-DSF-MRW Document 77-9 Filed 03/05/18 Page 5 of 5 Page ID #:1571
BAHAR SODAIFY
Ms. Sodaify is an Associate Attorney at Clarkson Law Firm, P.C. Ms. Sodaify focuses her practice on consumer class actions in the areas of food labeling, cosmetics, and other consumer products. Prior to joining Clarkson Law Firm, P.C., Ms. Sodaify was a litigation associate at a Southern California personal injury firm. Ms. Sodaify was actively involved at all stages of litigation and fought vigorously against insurance companies, multimillion dollar corporations, and government entities and helped recover millions of dollars for her clients. Ms. Sodaify dedicated a majority of her practice to preparing and attending hearings for minors who had been injured in an accident.
Ms. Sodaify is admitted to the State Bar of California as well as the bars of the United States District Courts for the Central and Northern District of California.
Ms. Sodaify graduated from Southwestern Law School in 2012, where she was a member of Southwestern’s Journal of International Law and The Children’s Rights Clinic. In 2009, Ms. Sodaify graduated from University of California, Los Angeles, summa cum laude where she earned a B.A.
Ms. Sodaify is currently actively working on the following slack-fill cases:
• Thomas v. Nestle U.S.A., Inc., Los Angeles Superior Court Case No. BC649863
• Tsuchiyama v. Taste of Nature, Los Angeles Superior Court Case No. BC651252
• Escobar v. Just Born, Inc., U.S. District Court, Central District of California Case No. 2:17-cv-01826- BRO-PJW
• Iglesias v. Ferrara Candy Co., U.S. District Court, Northern District of California Case No. 3:17-cv- 00849-VC
• Gordon v. Tootsie Roll Industries, Inc., U.S. District Court, Central District of California Case No. 2:17-cv-02664-DSF-MRW
Case 2:17-cv-02664-DSF-MRW Document 77-10 Filed 03/05/18 Page 1 of 3 Page ID #:1572
1 CLARKSON LAW FIRM, P.C. Ryan J. Clarkson (SBN 257074) 2 [email protected] Shireen M. Clarkson (SBN 237882) 3 [email protected] Bahar Sodaify (SBN 289730) 4 [email protected] 9255 Sunset Blvd., Ste. 804 5 Los Angeles, CA 90069 Tel: (213) 788-4050 6 Fax: (213) 788-4070
7 Attorneys for Plaintiff Ketrina Gordon
8 IN THE UNITED STATES DISTRICT COURT 9 FOR THE CENTRAL DISTRICT OF CALIFORNIA 10 11 KETRINA GORDON, individually and ) Case No. 2:17-cv-02664-DSF-MRW on behalf of all others similarly ) situated, ) [CLASS ACTION]
12 )
P.C.
, 13 Plaintiff, ) DECLARATION OF KETRINA
IRM ) GORDON IN SUPPORT OF F 14 vs. ) PLAINTIFF’S MOTION FOR
AW
L ) CLASS CERTIFICATION 15 TOOTSIE ROLL INDUSTRIES, INC., ) and DOES 1 through 10, inclusive, )
LARKSON 16 )
Los Angeles, 90069CA C Defendants. )
9255 Blvd., Sunset Suite 804 17 ) ) 18 ) ) 19 ) ) 20 ) ) 21 ) ) 22 )
23 24 25 26 27 28
DECLARATION OF KETRINA GORDON Case 2:17-cv-02664-DSF-MRW Document 77-10 Filed 03/05/18 Page 2 of 3 Page ID #:1573
1 DECLARATION OF KETRINA GORDON 2 I, Ketrina Gordon, declare as follows: 3 1. I am a Plaintiff in the above-referenced action. I have personal 4 knowledge of all of the facts stated herein, and if called to testify as a witness, I could 5 and would competently testify to them. 6 2. This declaration is submitted in support of Plaintiff’s motion for class 7 certification. 8 3. I reside in the City of North Hollywood in Los Angeles County. 9 4. I go to the movies approximately once a month. Whenever I go to the 10 movies, I see movie theater candy boxes like Junior Mints for sale.
11 5. I purchased a Junior Mints® 3.5 oz box (the “Product”) manufactured
12
P.C.
by Defendant Tootsie Roll Industries, Inc. (“Defendant”) at Pacific Theaters at the
,
IRM
F 13 Grove in Los Angeles, California in July or August of 2016.
AW L 14 6. I paid approximately $4.00 for the Product. 15 7. When purchasing the Product, I relied upon the size of the box to
LARKSON
Los Angeles, 90069CA
C
9255 Blvd., Sunset Suite 804 16 indicate the quantity of candy contained therein. 17 8. I purchased the Product to share with my friends during the movie. 18 9. The quantity of candy I received was not commensurate with the size 19 of the Product’s packaging. It was much less. 20 10. I did not have an opportunity to examine the Product’s box before 21 purchasing the Product since it was behind a showcase window at the movie 22 theater. Even if I was able to examine the Product’s box I would not have expected 23 the Product’s box to contain so much empty space. 24 11. I was misled by the size of the box as compared to the actual quantity 25 of candy contained therein and lost money because I did not receive the amount of 26 candy I expected to receive based on the size of the packaging. 27 28 1 DECLARATION OF KETRINA GORDON
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1 12. In reliance upon Defendant’s false, misleading, and deceptive Product 2 packaging, I lost money that I would otherwise have not spent. 3 13. I foresee purchasing Defendant’s Products, including the Product, in 4 the future when I go to the movies with my friends but I will not know how much 5 empty space is in the opaque packaging by just looking at the packaging alone. I 6 will always have to wonder whether the package is filled with a quantity of candy 7 that is commensurate with the size of the box. 8 14. I have worked with my attorneys on this matter and fully understand 9 the responsibilities and obligations that go along with serving as a class 10 representative in this case. I do not have any conflicts of interest with any other
11
members of the proposed Class. I will continue to assist my attorneys in 12
P.C.
, vigorously prosecuting this action, and, in doing so, I will protect the interests of
IRM
F 13
the Class.
AW L 14
15
LARKSON
Los Angeles, 90069CA
C I declare under penalty of perjury under the laws of the United States and the
9255 Blvd., Sunset Suite 804 16 State of California that the foregoing is true and correct. Executed on March 2, 2018 17 at Los Angeles, California. 18
19
20
21 Ketrina Gordon
22 23 24 25 26 27 28 2 DECLARATION OF KETRINA GORDON
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1 CLARKSON LAW FIRM, P.C. Ryan J. Clarkson (SBN 257074) 2 [email protected] Shireen M. Clarkson (SBN 237882) 3 [email protected] Bahar Sodaify (SBN 289730) 4 [email protected] 9255 Sunset Blvd., Ste. 804 5 Los Angeles, CA 90069 Tel: (213) 788-4050 6 Fax: (213) 788-4070
7 Attorneys for Plaintiff Ketrina Gordon
8 IN THE UNITED STATES DISTRICT COURT 9 FOR THE CENTRAL DISTRICT OF CALIFORNIA 10 11 KETRINA GORDON, individually and ) Case No. 2:17-cv-02664-DSF-MRW on behalf of all others similarly ) situated, ) [CLASS ACTION]
12 ) P.C.
, 13 Plaintiff, ) DECLARATION OF CLAIRE
IRM ) SAND PH.D. IN SUPPORT OF F vs. ) PLAINTIFF’S MOTION FOR
14 AW
L ) CLASS CERTIFICATION 15 TOOTSIE ROLL INDUSTRIES, INC., ) and DOES 1 through 10, inclusive, ) Sunset Blvd.,Suite 804
LARKSON LARKSON ) Los Angeles, CA 90069 CA Angeles, Los
C 16 Defendants. ) 9255 17 ) ) 18 ) ) 19 ) ) 20 ) ) 21 ) ) 22 )
23 24 25 26 27 28
DECLARATION OF CLAIRE SAND, PH.D. Case 2:17-cv-02664-DSF-MRW Document 77-11 Filed 03/05/18 Page 2 of 2 Page ID #:1576
1 DECLARATION OF CLAIRE SAND, PH.D. 2 I, CLAIRE SAND, declare as follows: 3 1. I am a packaging science and research expert retained for the above- 4 mentioned case. I have personal knowledge of the facts set forth in this declaration 5 and, if called as a witness, I could and would testify competently thereto. Attached 6 hereto as Exhibit A is my curriculum vitae. 7 2. I make this declaration in support of Plaintiff’s motion for class 8 certification. Attached hereto as Exhibit B is my expert report containing my 9 opinions regarding the products at issue. 10
11 I declare under penalty of perjury under the laws of the United States and the
P.C. 12 State of California that the foregoing is true and correct. Executed on February 25, , IRM F 13 2018 at Stillwater, Minnesota.
AW L 14
15
LARKSON LARKSON Los Angeles, CA 90069 CA Angeles, Los C
9255 Sunset Blvd., Suite 804 Suite Blvd., Sunset 9255 16 Claire Sand, Ph.D.
17 18 19 20 21 22 23 24 25 26 27 28 1 DECLARATION OF CLAIRE SAND, PH.D.
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EXHIBIT A Case 2:17-cv-02664-DSF-MRW Document 77-12 Filed 03/05/18 Page 2 of 12 Page ID #:1578
Summary Claire Koelsch Sand, Ph.D.
Dr. Claire Sand runs Packaging Technology and Research, where she provides project based strategy, technology, consulting and coaching services to food and packaging companies.
Claire Sand is an industry and academic leader who focuses on food packaging, food engineering, and food science. Sand integrates material science, active and intelligent packaging, ingredient technology, and food processing strategies to launch new Claire Koelsch Sand, Ph.D. products and extend the shelf life of existing products. Owner, Packaging Technology & Research, LLC Adjunct Professor, Michigan State University
In her 30 plus year career, Dr. Sand has held a variety of roles p:612-807-5341 across the food science and packaging spectrum. Prior to leading e:[email protected] her own company, Sand’s experience ranged from basic research w:packagingtechnologyandresearch.com and development to strategic value chain analysis and everything in Quick Links between. Her portfolio includes working with Gerber - Nestle, Pillsbury- General Mills, Kraft Foods -Kraft Heinz, Dominick’s - Summary Safeway, and research institutes in Germany, Colombia, and Thailand. Current Affiliations
Industry Experience Dr Sand is also: Academic Experience • Fellow, Institute of Food Technologists (IFT) • Adjunct professor at Michigan State University International Experience • Adjunct professor at CalPoly Legal Experience • Packaging columnist, IFT’s Food Technology magazine • Editorial Board, Packaging Science and Technology Editorial Boards & Officerships – Past • Board member, Higher Education Review Board (HERB), IFT • Reviewer, Journal of Food Science Books & Chapters • Chair, Global Food Packaging Curricula Development, IUFoST Articles • Pac FoodWaste Co-Chair • Past-Chair, IFT Food Packaging Division Presentations Panels, and Short Courses • Committee member, Phi Tau Sigma Strategic Relations and Chapter Affairs Education • Stillwater Human Rights Commissioner • Stillwater School District Workforce Committee member
Dr. Sand holds a doctorate degree in Food Science and Nutrition from the University of Minnesota and MS and BS in Packaging from Michigan State University. packagingtechnologyandresearch.com
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Current Affiliations CEO and Founder Packaging Technology and Research, LLC. Stillwater, Minnesota. 1996-present · Propose, develop, and direct strategic and technical food and packaging projects · Consulting on: M&A, innovation, sustainability, and cost optimizations, efficiencies, · category direction, food safety · Apply appropriate food safety and packaging technology to developing markets · Translate shared value and value chain intentions into business partnerships
Adjunct Professor Michigan State University. E. Lansing, Michigan Adjunct Faculty online MS program, 2007-present
California Polytechnic University (CalPoly), San Luis Obispo, California Adjunct Faculty online MS program, 2017-present
Columnist Food Technology monthly magazine Packaging monthly column, 2015-present
Boards and Commissions · Fellow, Institute of Food Technologists, inducted 2017 · pac, Co-Chair Food Waste, 2018-present · pac, Food Waste Leadership Team, 2016-present · Advisory Board, Sweetwater Energy, 2016-present · IUFoST, Chair of Global Food Packaging Curricula, 2016-present · Packaging Science and Technology, John Wiley and Sons, Editorial Board and Reviewer, 2004- present · Journal of Food Science Reviewer, 2014-present · Institute of Food Technologists (IFT) o Higher Education Review Board (HERB), 2014-present o Executive Board, Food Packaging Division, 2005-present · Phi Tau Sigma (food science honorary society), o Strategic Relations & Chapter Affairs committees, 2014-present · University of Minnesota Alumni Association and CFANS, 1992-present · Michigan State University School of Packaging Alumni Association, 1999-present · Human Rights Commission Stillwater, Minnesota, 2013-present · Workforce Development Commission Stillwater, Minnesota, 2014-present
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Industry Experience
Industry: Marketing Dominick’s Finer Foods. Northlake, Illinois Category Brand Manager, 1997-1998 · Developed and implemented strategies that increased international food sales by 55% · Identified, sourced, purchased, and marketed international foods · Applied alternative product, package, and marketing of international foods
Industry: Market Research Total Quality Marketing. Chicago, Illinois Package and Product Development Consultant, 1995-1997 · Conducted research to identify opportunities and refine growth strategies for multiple clients · Systematized product optimization, training, shelf life extension, investments, and testing
Industry: Research and Development Packaging Technology and Research, LLC. Stillwater, Minnesota. CEO, 1996-present · Propose, develop, and direct strategic and technical food and packaging projects · Consulting on: M&A, innovation, sustainability, and cost optimizations, efficiencies, · category direction, food safety · Apply appropriate food safety and packaging technology to developing markets · Translate shared value and value chain intentions into business partnerships
Kraft Foods. Glenview, Illinois Technical Business Manager, 1993-1995 Research Engineer, 1992-1993 · Responsible for product/product/process/package resource for $126 million Confection Div · Managed rapid development and production scale-up of 1994 introductions · Developed and implemented process to reduce marshmallow consumer complaints by 75% · Led a “Special Situation“ team to resolve a recall and safety crisis
Grand Metropolitan (General Mills). Minneapolis, Minnesota Guest Food Engineer, Strategic Technology Division, 1991 · Explored ohmic, microwave, minimal processes, and the applicability of expert systems
Gerber Products Company (Nestle), Fremont, Michigan Packaging Engineer. 1986–1987
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Legal Expert Witness Experience
Inline Packaging Inc v Graphic Packaging International, Inc. IPR2015‐01609 · Neustel Legal. Fargo, SD · Declaration in support of petition for inter parties review (mid-2015) · Depositions (mid and early-2016) · Complete-Successful Ruling: PTAB decision invalidated all 53 claims (early-2017)
KH Enterprises Group, Inc v. Swiss Valley Farms Cooperative Civil File No 12-cv00086. · Faegre Baker Daniels, LLP. Minneapolis, MN · Expert reports (2017) · Deposition (2017) · Complete-Case settled
ScentSational Technologies, LLC v. PepsiCo, Inc., et al. C.A. No.: 13-cv-8645 (KMK) (LMS) (SDNY) · Leason Ellis. White Plains, NY · Expert report (early-2016) · Deposition (mid-2016) · In process
Alessandro Berni, et al. v. Barilla S.p.A., et al. Case No. 1:16-cv-04196; Eastern District of New York · Harwood Feffer LLP · In process
Iglesias et. al. v. Ferrara Case No. 3:17-cv-00849-VC, US District Court, Northern District of California Gordon et al v. Tootsie Roll Case No. 2:17-cv-02664-DSF-MRW, US District Court, Central District of California Gordon et. al. v. Nestle Case No. BC649863, Superior Court for the State of California County of Los Angeles Escobar et. al. v. Just Born Case 2:17-cv-01826, Superior Court for the State of California County of Los Angeles. Tsuchiyama, et. al. v. Taste of Nature · Clarkson Law Firm · Expert reports in process
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Academic Experience
Academic: Online Teaching and Course Development · Michigan State University. E. Lansing, Michigan o Adjunct Faculty online MS program, 2007-present · Cal Poly. San Luis Obispo, California o Adjunct Faculty online certificate and MS program, 2017-present · Rochester Institute of Technology. Rochester, New York o Adjunct Faculty online, 2009-2011 · University of Florida. Gainesville, Florida o Adjunct Faculty online, 2010-2012
Academic: Management University of Wisconsin. Menomonie, Wisconsin Administrative and Research Director, Food Packaging Technology Center, 2002-2007 · Co-developed, implemented, and managed creation of the Center · Engineered $11.2 million for center for small farms and value-added food businesses · Initiated and directed research project work with small area farmers and businesses
Academic: Tenured Associate Professor University of Wisconsin. Menomonie, Wisconsin Tenured Associate Professor, 1998-2007 · Chair and Vice Chair of Curriculum and Instruction Committee 2002-2006 · Dean's Recognition for excellence in multidisciplinary approach · Outstanding Researcher of the Year Nominee 2003
International Experience
IESC
J.E. Austin and Associates Washington DC o Advisor, 2009 o Food production/packaging advice to KSA
Fraunhofer Institute - IVV, Freising, Germany o Guest Scientist, January - July, 1992 o Co-developed EU standards on migration from polymer into high fat foods SCFE/MS
Org. of American States, Bogota, Colombia o Technical Advisor, June - September, 1986 o Developed a food packaging laboratory model at existing food research facility
Bangkok Orchids Co., Bangkok, Thailand o Packaging Advisor. January - April, 1986 o Developed appropriate package process improvements to extend the shelf life of orchids
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Editorial Boards & Officerships – Past
Michigan State University o Board of Directors, MSU School of Packaging Alumni Association 1996 to 2003 o MSU School of Packaging Alumni Association, Membership Com Chair 2000-2001 o MSU School of Packaging Alumni Association, Secretary 1999 to 2000
Institute of Food Technologists (IFT) o Chairperson, Institute of Food Technologists Food Packaging Div 2016 to 2017 o Chair-Elect, Institute of Food Technologists Food Packaging Div 1992 to 1993 o Global Interests subcommittee, Institute of Food Technologists 1997 to 2000 o Task Force on Governance, Institute of Food Technologists 1997 to 1998 o National Councilor, Institute of Food Technologists 1996 to 1997 o Newsletter Editor, Institute of Food Technologists Food Packaging Div 1994 to 1997
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Articles
· Sand, C, 2018. Packaging to Keep Produce Fresh. Food Technology, January
· Sand, C, 2017. Value -Added Packaging. Food Technology, December
· Sand, C, 2017. Materials for Increased Packaging Sustainability. Food Technology, November
· Sand, C, 2017. Ingredient Packaging Close-up. Food Technology, September
· Sand, C, 2017. Global Approaches to Sustainable Food Packaging. Food Technology, October
· Sand, C, 2017. Good Things Come in Packaging. Food Technology, August
· Sand, C, 2017. Packaged to Preserve. Food Technology, July
· Sand, C, 2017. Vetting Food Packaging. Food Technology, June
· Sand, C, 2017. Packaging Opportunities Are Nicely Bundled at IFT17. Food Technology, May
· Sand, C, 2017. Business Case for Reducing Food Waste. Food Technology, April
· Sand, C, 2017. Food Service Craves Packaging. Food Technology, March
· Sand, C, 2017. Barrier packaging. Food Technology, February
· Sand, C, 2017. Packaging Solutions for Clean Label Products. Food Technology, January
· Sand, C., 2016. Packaging Shapes Up and Feels Great. Food Technology, December
· Sand, C., 2016. Innovations in Plastic Food Packaging. Food Technology, November
· Sand, C., 2016. Increasing Agility in the Packaging Value Chain. Food Technology, October
· Sand, C., 2016. The Packaging Scene at IFT16. Food Technology, September
· Sand, C., 2016. Pivots Package Innovation. Food Technology, August
· Sand, C., 2016. Reduce Packaging Costs. Food Technology, July
· Sand, C., 2016. Packaging Solutions at IFT. Food Technology, June
· Sand, C., 2016. MAP Expands. Food Technology, May
· Sand, C., 2016. Food Packaging Research. Food Technology, April
· Sand, C., 2016. Societal Factors Influence Packaging. Food Technology, March
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· Sand, C., 2016. Opening Innovation with Closures. Food Technology, February
· Sand, C., 2016. Strategies to Halt Package Fraud. Food Technology, January
· Sand, C., 2015. Packaging Machinery Flexes. Food Technology, December.
· Sand, C., 2015. Intelligent Packaging Advances. Food Technology, November.
· Sand, C., and Brody, A., 2015. Packaging innovations that decrease consumer derived food waste. Food Technology, October.
· Sand, C., and Brody, A., 2015. Packaging that Sells. Food Technology, August.
· Brody, A., Sand, C. Sabbagha, F., 2014. RFID in Packaging using Value Chain. Food Technology. October
· Brody, A., Sand, C. Sabbagha, F., 2014. RFID in Packaging. Food Technology. September. pp79- 80.
· Sand, C.K., 2009. Food Service Packaging. Wiley Encyclopedia of Packaging Technology.
· Casper, D.F., and Sand, C.K., 2009. Specifications and Quality Procedures. Wiley Encyclopedia of Packaging Technology..
· Brody, A., Bugusu, B., Han, J., McHugh, T., Sand, C.K., 2008. Scientific Status Summary: Innovative Food Packaging Solutions. Food Technology.
· Sand, C.K. and Blakistone, B., 2007. Using packaging technologies to respond to Consumer, Retailer, and Seafood Industry needs. Proceedings from International Smoked Fish Conference March. Anchorage, Alaska.
· Sand, C.K., 1996. Translating Consumer Needs into the Package. Packaging Yearbook, 1996. Washington DC. Editor Blakistone, B. pp 98-114.
· Sand, C.K., 1996. Specifications and Quality Assurance. In The Wiley Encyclopedia of Packaging Technology. New York. Editor Brody, A. 849-852.
· Koelsch, C.M., 1994. Edible Barriers: A Review of their Properties and Promise. Trends in Food Sci. and Tech. 5 (3): 76-81.
· Koelsch, C.M. and Labuza, T.P., 1992. Functional, Morphological and Physical Properties of Edible Fatty Acid Based Barriers. Lebensm. Wiss. und Technol. 25: 404-411.
· Koelsch, C.M. and Labuza, T.P., 1991. Plastic, Packaging and Municipal Solid Waste: The Current Controversy I and II. Cereal Foods World. 36 (1): 44-52; 36 (3): 284-298.
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· Koelsch, C.M., Downes, T.W., and Labuza, T.P., 1991. A System and Kinetic Expressions for the Measurement of Hexanal Formation via Lipid Oxidation as a Function of Oxygen Concentration. Journal of Food Sci. 56 (3): 816-834.
· Hong, Y.C., Koelsch, C.M., and Labuza, T.P., 1991. Using the L# to Predict the Efficacy of Moisture Barrier Properties of Edible Food Coating Materials. J. Food Proc. Pres. 15: 45-62.
Books & Chapters · Sand, C., 2018. Intelligent packaging and the multisensory experience in Multisensory Packaging Design. · · Sand, C., 2010. The Packaging Value Chain. DesTech Publishing.
· Sand, C., 2009. Packaging sustainability and bio-degradable films and packaging in Modified Atmosphere Packaging MAP for Fresh-cut Fruit and Vegetables Brody, Han, Hong.
· Sand, C., 2007. Understanding and Executing Sustainability Initiatives and Sustainable Packaging Programs. Packaging Strategies.
Presentations, Panels, and Short Courses
· Sand, C.K., 2017. Packaging technologies and value chain concepts to advance value-added pulse-based foods. Convergent Innovation Webinar Series. McGill. Montreal. March, 2017.
· Sand, C.K., 2017. Tactical packaging challenges and solutions for fresh seafood. Louisiana. January, 2017
· Sand, C.K., 2016. Food Packaging Research Needs. IFT Annual convention, Chicago, IL July, 2016.
· Sand, C.K. 2015. Enabling your Innovations using the Packaging Value Chain. AMI Multilayer films conference. Chicago, June 3, 2015
· Sand, C.K. 2015. GFSI, BRC, SQF and Beyond: Where Food Safety is Heading and Packaging’s Role in Getting Us There. ADS Annual Technical Meeting San Antonio, Texas. May 5, 2015.
· Sand, C.K. 2015. Bringing in Innovation with the Packaging Value Chain. IFT Webcast February 26, 2015.
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· Sand, C.K. 2014. Influence of Packaging on Flavors in Foods. Flavor Short Course. University of Minnesota, St. Paul, MN
· Sand, C.K., 2014. Interview for Wall Street Journal: See-Through Food Packaging Boosts Sales Clear Packages Draw Shoppers But Are Very Tricky; What's Best Left Unseen
· Sand, C.K. 2008. Research Developments and Needs in Sustainable Packaging Metrics. IFT Panel. IFT Annual meeting. New Orleans, LA.
· Sand, C.K., 2008. IFT Short Course Speaker on packaging for Food Science for non Food Scientists. IFT Annual meeting. New Orleans, LA.
· Sand, C.K., 2008. Exercising Sustainable Packaging in the Sports Drinks Arena: New Technologies in Food Packaging that Enhance Shelf Life, Wellness, and Sustainability, Developing and Marketing Products for Consumer Health & Wellness. Rosemont, IL
· Sand, C.K., 2008. Sustainability will Drive the Packaging Value Chain. Packaging Executives Forum, E. Lansing, MI.
· Sand, C.K., 2007. More Sustainable Food Packaging. Quality Assurance Association. Edina, MN.
· Sand, C.K., and Brody, A., and Rubino, M., 2007. Food Packaging for Food Scientists. IFT Annual meeting. Chicago, IL.
· Sand, C.K. and Blakistone, B., 2007. Using packaging technologies to respond to Consumer, Retailer, and Seafood Industry needs. International Smoked Fish Conference March. Anchorage, Alaska.
· Sand, C.K., 2007. More Sustainable Food Packaging. Quality Assurance Association. Edina, MN.
· Sand, C.K. 2007. Food packaging Innovations Needed to Respond to Sustainability Initiatives. IFT Panel. IFT Annual meeting. Chicago, IL
· Sand, C.K., 2003. Appleton on-site training session. Appleton, WI
· Sand, C.K., 2003. On-campus training session for Appleton. University of Wisconsin-Stout.
· Sand, C.K., 2002. Teaching in the Laptop Environment. IAPRI Conference Worldpak. E. Lansing, MI MSU.
· Sand, C., 2001. Researcher of the Year Nominee Presentation. University of Wisconsin-Stout.
· Sand C.K., 2000. Package and Product Development for Beginners at Bringing Profit Back to the Farm in Eau Claire for University of Wisconsin cooperative extension service February, 2000
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Education
· Ph.D., Food Science and Nutrition, University of Minnesota, 1992
· M.S., Packaging, Michigan State University, 1989
· B.S., Packaging, Michigan State University, 1986
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EXHIBIT B Case 2:17-cv-02664-DSF-MRW Document 77-13 Filed 03/05/18 Page 2 of 47 Page ID #:1590
Expert Report of Claire Koelsch Sand, Ph.D.
Relating to Case No. 2:17-cv-02664-DSF-MRW
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TABLE OF CONTENTS
I. OPINIONS OF CLAIRE KOELSCH SAND PH.D. 4 II. CREDENTIALS 5 III. MATERIALS CONSIDERED 8 IV. BACKGROUND ON PACKAGING TERMS AND PROCESSES 9 V. OPINIONS OF CLAIRE KOELSCH SAND PH.D. 13 V.A. Respective contents within cartons of JuniorMints, JuniorMints-King 14 Size, and SugarBabies cannot be fully viewed V.B. Slack-fill exists within JuniorMints, JuniorMints-King Size, and 16 SugarBabies cartons V.B.1. Method for Assessing Presence of Slack-fill 18 V.B.2. Analyze data to assess the amount of slack-fill 22 V.B.3. Slack-fill Results for JuniorMints, JuniorMints-King Size, and 27 SugarBabies Tootsie candy V.C. Slack-fill is primarily nonfunctional slack-fill 28 V.C.1. Slack-fill is nonfunctional in the context of criteria 1 because 29 the slack-fill does not protect the JuniorMints, JuniorMints-King Size, and SugarBabies V.C.2. Slack-fill is nonfunctional in the context of criteria 2 because 34 the slack-fill is not needed in the machinery requirements to enclose the JuniorMints, JuniorMints-King Size, and SugarBabies V.C.3. Slack-fill is primarily nonfunctional in the context of criteria 3 36 because the slack-fill does not result from JuniorMints, JuniorMints- King Size, and SugarBabies settling during shipping and handling V.C.4. Slack-fill is nonfunctional in the context of criteria 4 because 39 the slack-fill is not necessary to perform a specific function for JuniorMints, JuniorMints-King Size, and SugarBabies V.C.5. Slack-fill is nonfunctional in the context of criteria 5 because 40 the JuniorMints, JuniorMints-King Size, and SugarBabies package is not suitable for reuse, as a durable commemorative or as a promotional package V.C.6. Slack-fill is nonfunctional in the context of criteria 6 because 41 the carton containing JuniorMints, JuniorMints-King Size, and SugarBabies slack-fill does not have to occur to enable food labeling, pilfering, handling, or tamper resistance VI. CONCLUSION 45
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INDEX OF TABLES
Table 1: Comparison between CFR 21 Section 100.100 and California Business & 12 Professional Code Section 12606.2 Table 2: Reference information for JuniorMints 18
Table 3: Reference information for JuniorMints-King Size 19
Table 4: Reference information for SugarBabies 19
Table 5: Volume of JuniorMints Candy cartons 24
Table 6: Volume of JuniorMints-King Size Candy cartons 24
Table 7: Volume of SugarBabies Candy cartons 25
Table 8: Volume and Weight of JuniorMints with carton 25
Table 9: Volume and Weight of JuniorMints-King Size with carton 26
Table 10: Volume and Weight of SugarBabies with carton 26
Table 11: Slack-fill for JuniorMints, JuniorMints-King Size, and SugarBabies 27 Table 12: Summary of functional and nonfunctional slack-fill 29
Table 13: Ingredient statements of Tootsie Candy 30
Table 14: Candy Density 36
Table 15: Difference between the effective and actual volume 37
Table 16: Principal display panel area 41
2
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INDEX OF FIGURES
Figure A: Generic Schematic of the folding carton for JuniorMints, JuniorMints- 10 King Size, and SugarBabies candy Figure B: CFR 21 Section 100.100 11 Figure C: JuniorMints carton held directly on a 40watt fluorescent light 15 Figure D: Different Geometries of Tootsie Candy 17 Figure E: Opening of package from Clarkson Law firm 18 Figure F: Measurement of height of candy with carton 19 Figure G: Weight of candy after poured from carton 20 Figure H: Final volume in cylinder after candy was added 21 Figure I: Measurement of interior height, width, and depth 22 Figure J: Functional and nonfunctional slack-fill 28 Figure K: JuniorMints cracked and the filling sticking to side of inner carton 32 Figure L: Visual showing that the JuniorMints carton is larger than JuniorMints- 42 King Size carton Figure M: Principal display panel within CFR21 43
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I. OPINIONS OF CLAIRE KOELSCH SAND PH.D. I, Dr. Claire Koelsch Sand, submit this Expert Report on behalf of Plaintiff Escobar in the above captioned matter. I have been retained by the Clarkson Law Firm, as an expert in food product and packaging expert with expertise in: research, development, and design, and the functions of food packaging. I have been asked to analyze evidence relating to cartons containing JuniorMints, JuniorMints-King Size, and SugarBabies Tootsie candy and consider what if any slack-fill was present and if it was present to consider if it was non-functional slack-fill as outlined in CFR21 100.100 and California Code 12606.2. It is my opinion that: 1. Tootsie cartons containing JuniorMints, JuniorMints-King Size, and SugarBabies do not allow the consumer to fully view their respective contents. This is explained in Section V.A. 2. Tootsie cartons containing JuniorMints, JuniorMints-King Size, and SugarBabies have slack-fill. This is explained in Section V.B. 3. Tootsie cartons containing JuniorMints, JuniorMints-King Size, and SugarBabies exhibit a high degree non-functional slack-fill as compared to the small degree of functional slack- fill. This is explained in Section V.C.
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II. CREDENTIALS 1. I am the founder and owner of Packaging Technology and Research, LLC in Stillwater, MN, an Adjunct Professor at Michigan State University and at California Polytechnic University, and a consultant on international food and packaging development projects. A copy of my curriculum vitae is attached as Exhibit A. 2. I received a B.S. in Packaging from Michigan State University in 1986, a M.S. in Packaging from Michigan State University in 1989 and a Ph.D. in Food Science and Nutrition from the University of Minnesota in 1992. 3. I have 22 years of direct industry experience with packaging suppliers and food companies in the food packaging industry. My food and beverage packaging experience include basic research, development, market research and marketing with, Gerber, Pillsbury, Kraft Foods, Total Quality Marketing, and Dominick’s. I also conducted research at institutes in the United States, Germany, and Colombia. I have been and am responsible for designing and refining packaging components of new food products and revising packaging components of existing food products to meet consumer and market needs. I also have been and am responsible for projects to reduce costs, provide strategic direction to guide mergers and acquisitions, align technology, and assess strategic and other technologies for applications within the food and packaging industry. 4. I have eight years of direct academic packaging specific experience in additional to industry research and development experience. I have taught Packaging Materials courses (covering plastics, metals, glass, paper/paperboard) for 8 years as an Associate Professor. I have also developed and taught Food Packaging graduate level courses which focus on shelf life, the kinetics of sorption, migration, diffusion, permeation, and market dynamics and strategies. 5. I have theoretical and applied experience with the material science dynamics associated with package integrity, packaging materials, and extending product shelf life with packaging. My Ph.D. dissertation was on diffusion within and migration from food and through edible films to extend product shelf life. I co-developed European Union (“EU”) methods for additive migration from polymers into high fat foods which includes cheese. The undergraduate packaging material courses and graduate courses that I taught cover packaging material selection, sorption, migration, diffusion, and permeation. During my 22 years of industry experience, I have worked on food shelf life projects involving material selection serving in
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various roles such as basic research, research and development, marketing, and marketing research. I have developed various packaging for foods to extend product shelf life. I also have experience assessing expert systems that model food deterioration as a function of package material properties and predict shelf life of products as a function of package permeation, sorption, migration, diffusion, and product characteristics. Industry experience includes: increasing product shelf life using package, reducing package cost while maintaining product shelf life, identifying the cause of product and/or package failure, and redesigning packaging to increase shelf life to specifically resolve mold and other concerns effecting product shelf life, altering packaging materials to accommodate distribution. 8. I have theoretical and applied experience with paperboard carton design and construction relating to food packaging. I took M.S. level courses in this area and have worked on projects to determine the best carton for specific products. During my 22 years of industry experience, I have directed carton design, construction, and selection in various roles from research engineer to project manager, for food packaging projects from a food packaging science and marketing perspective. For Kraft products and other food companies, I explored carton designs to best meet the needs of entities in the value chain such as suppliers, manufacturers, distributors, retailers, consumers, and the post-consumer environment. I also have experience with determining the shelf life of food products. 9. I have given over 20 presentations and published over 20 articles, books, and book chapters on food packaging topics related to packaging. 10. I am a Contributing Editor and the Packaging columnist for Food Technology, which provides industry updates on a range of food packaging topics. In my role as the Packaging columnist since August 2015, I have identified and researched critical food packaging topics in the context of how consumer and market needs can be met with packaging solutions. 11. I am a Reviewer for the Journal of Food Science (since 2014) and on the Editorial Board of Packaging Technology and Science (since 2004). These publications relate to new food packaging materials, research, processes, innovations, and strategies. 12. I am on the Higher Education Review Board (HERB) for the Institute of Food Technologists (IFT), the current (2016-2017) and former Chair (1993-1994) of the IFT Food Packaging Division, and a member of the Strategic Relations committee of Phi Tau Sigma (Food Science Honorary Society), a co-Chair of the pac Food Waste Leadership Team, and
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International Union of Food Science and Technology (IUFoST) Chair of Global Food Packaging Curricula Development. 13. In 2017, I was elected to be a Fellow of the Institute of Food Technologists, an honor for which less than 0.3% of the professional membership is eligible, and even fewer than that achieve this status. 14. In the past four years, I have not testified as an expert at trial, but I did provide support, declarations and/or depositions for: • ScentSational Technologies, LLC v. PepsiCo, Inc., et al.; C.A. No.: 13-cv-8645 (KMK) (LMS) (SDNY). I provided expert reports (early-2016 and early-2017), and a Deposition (mid-2016) for ScentSational Technologies. • Alessandro Berni, et al. v. Barilla S.p.A., et al.; Case No. 1:16-cv-04196; Eastern District of New York which is in process. I provided a review of filing documents (late-2016 and early-2017) for Berni et al. • Inline Packaging Inc v Graphic Packaging International, Inc.; IPR2015‐01609 . I provided a Declaration in support of Inline’s petition for inter parties review (mid- 2015) and two Depositions (mid and early-2016). Patent Trial and Appeal Board (PTAB) decision invalidated all 53 claims and has concluded (early-2017). • KH Enterprises Group, Inc v. Swiss Valley Farms Cooperative Civil File No 12- cv00086. I provided expert reports Expert reports (2017) and Deposition (2017) for Swiss Valley Farms. Case settled 15. The compensation paid for time spent working on this matter is based on my typical hourly rate of $225per hour, $400 per hour for deposition and $700 per hour court activity. This compensation is not contingent upon my performance, the substance of my opinions or testimony, the outcome of this matter, or any issue involved in or related to this matter. I have no financial interest in Tootsie or any related parties.
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III. MATERIALS CONSIDERED In connection with my analysis, I have reviewed the following and information mentioned in this report: CFR 21 100.100
California Business & Professional Code Section 12606.2
Candy within and cartons of JuniorMints, JuniorMints-King Size, and SugarBabies
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IV. BACKGROUND ON PACKAGING TERMS AND PROCESSES
Packaging terms used within the text are explained in this section.
Packaging Specifications Packaging specifications are used as a communication tool in the entire supply chain from the source of the polymer to the final disposal. Within the packaging supply chain, packaging delivered to the final user of the package represents the composite of what was in specification prior to that point in the supply chain.
Delaney clause Packaging components, such as the paperboard carton of the JuniorMints, JuniorMints-King Size, and SugarBabies candy, and the adhesive employed to seal the cartons are governed as indirect food additives by the FDA in CFR 21 and, are defined as such in the 1958 Delaney clause.
Folding cartons A generic schematic folding carton that contains the JuniorMints, JuniorMints-King Size, and SugarBabies candy is shown below.
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GRAIN ·------~
1-- LENGTI< 7 WIDTH 1-- LENGTN 7 WlD~~ S INNER TOP t----1 OUTER TOP t-:.:.:.:.:. T CLOSURE PANEL OUST CLOSURE PANEL OUST W FLAP ~LAP -- - -1-,.. -- ~ ------,11 --1--
I I I ~1 I I .t1 REAR I LEF"T I FRONT I RIGHT PANEL SIDE I PANEL SIDE ~I I PANEL IPANEL I I I I I I I
'--I------1- .. -~----i--- _ _,__ tNNER BOTTOM OUST OUTER BOTTOM OUST CLOSURE PANEL FLAP CLOSUR.E PANEL FLAP W ~----'--L Figure A Generic Schematic of the folding carton for JuniorMints, JuniorMints-King Size, and SugarBabies candy
The carton is constructed of solid bleached sulfate and is approximately 14point and 0.014 inches thick.
CFR 21 100.100 CFR 21 addresses many aspects of food packaging. Section addressing misleading containers is relevant and is in Figure B.
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Figure B CFR 21 Section 100.100
[Code of Fede r a l Regul ati ons ] [Ti t l e 21, Vol ume 2] [Revi sed as of Ap r il 1, 2017] [CITE: 21C FR100 . 100 ]
TI TLE 21--FOOD AND DRUGS CHAPTER I --FOOD AND DRUG ADMINISTRATI ON DEPARTMENT OF HEALTH AND HUMAN SERVICES SUBCHAPTER B--FOOD FOR HUMAN CONSUMPTI ON PART 100 -- GENERAL Subpar t F--Mi sbr andi ng f or Reasons Ot he r Than Labeling
Sec . 100 . 100 Mi s l eadi ng contai ne r s .
In accordance wi t h sec t i on 403 (d) of t he ac t, a f ood sha ll be deemed t o be mi sbr anded i f i ts contai ne r i s so made, f ormed , or f illed as t o be mi s l eadi ng. (a ) A contai ne r t hat does not a llow t he cons ume r t o f ully vi ew i ts contents sha ll be cons i de r ed t o be f illed as t o be mi s l eadi ng i f i t contai ns nonf unc t i ona l s l ac k- f ill. Slac k f ill i s t he di ffer ence between t he ac t ua l capac i ty of a contai ne r and t he vol ume of pr oduc t contai ned t he r e i n . Nonf unc t i ona l s l ac k- f ill i s t he empty space i n a pac kage t hat i s f illed t o l ess t han i ts capac i ty f or r easons ot he r t han : (1 ) Pr otec t i on of t he contents of t he pac kage; (2) The r equi r ements of t he machi nes used f or enc l os i ng t he contents i n such pac kage; (3) Unavoi dabl e pr oduc t settling dur i ng shipping and handling; (4) The need f or t he pac kage t o per f orm a spec i f i c f unc t i on (e . g . , whe r e pac kaging plays a r ol e i n t he pr epar ati on or cons umption of a f ood) , whe r e such f unc t i on i s i nhe r ent t o t he natur e of t he f ood and i s c l ear ly communi cated t o consume r s; (5) The fac t t hat t he pr oduc t cons i sts of a f ood pac kaged i n a r eusabl e contai ne r whe r e t he contai ne r i s par t of t he pr esentati on of t he f ood and has va l ue whi ch i s both s i gni f i cant i n pr opor t i on t o t he va l ue of t he pr oduc t and i ndependent of i ts f unc t i on t o hol d t he f ood , e . g . , a gi ft pr oduc t cons i sti ng of a f ood or f oods combined wi t h a contai ne r t hat i s i ntended f or f ur t he r use after t he f ood i s consumed ; or dur abl e commemor ati ve or pr omot i ona l pac kages; or (6) Inability t o i ncrease l eve l of f ill or t o f ur t he r r educe t he s i ze of t he pac kage (e . g . , whe r e some mi ni mum pac kage s i ze i s necessar y t o accommodate r equi r ed f ood l abeling (exc l udi ng any vi gnettes or ot he r nonmandator y desi gns or l abel i nf ormati on) , di scour age pilfer i ng, fac ilitate handling, or accommodate tamper - r esi stant devi ces) .
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The California Business & Professional Code Section 12606.2 aligns with the CFR 21 Section and the comparison is shown below.
Table 1 Comparison between CFR 21 Section 100.100 and California Business & Professional Code Section 12606.2 CFR 21 Cal Bus & Prof Code 100.100(a)(1) 12606.2(c)(1) 100.100(a)(2) 12606.2(c)(2) 100.100(a)(3) 12606.2(c)(3) 100.100(a)(4) 12606.2(c)(4) 100.100(a)(5) 12606.2(c)(5) 100.100(a)(6) 12606.2(c)(6)
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V. OPINIONS OF CLAIRE KOELSCH SAND PH.D. It is my opinion that: 1. Tootsie cartons containing JuniorMints, JuniorMints-King Size, and SugarBabies do not allow the consumer to fully view their respective contents. This is explained in Section V.A. 2. Tootsie cartons containing JuniorMints, JuniorMints-King Size, and SugarBabies have slack-fill. This is explained in Section V.B. 3. Tootsie cartons containing JuniorMints, JuniorMints-King Size, and SugarBabies exhibit a high degree non-functional slack-fill as compared to the small degree of functional slack- fill. This is explained in Section V.C.
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V.A. Respective contents within cartons of JuniorMints, JuniorMints-King Size, and SugarBabies cannot be fully viewed It is my opinion that the respective contents within cartons of JuniorMints, JuniorMints-King Size, and SugarBabies cannot be fully viewed. To assess if the respective contents of JuniorMints, JuniorMints-King Size, and SugarBabies candy when viewed from outside the cartons, a sample size was used. This was because it is not viable to collect and analyze the entire population of the JuniorMints, JuniorMints-King Size, and SugarBabies candy on the market.
To obtain samples to assess transparency of the cartons and the ability to fully view contents, samples of cartons were sent from Clarkson Law Firm to my secure PO Box. I examined the carton transparency by holding unopened cartons directly on a 40-watt florescent light bulb (Sylvania H698) and checking to see if I could see the height of the candy. While lighting does vary in retail environments where the candy is purchased this assessment was a “worse case” scenario since consumers are not likely to hold the carton directly on a fluorescent ceiling light bulb and the ability see any (versus fully view) volume of candy was assessed. Consumer vision also varies. Contents are likely not able to be seen at all through the cartons of JuniorMints, JuniorMints-King Size, and SugarBabies. The JuniorMints carton image shown below serves as a demonstration that the carton contents cannot be viewed fully in a high light situation.
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Figure C JuniorMints carton held directly on a 40watt fluorescent light
Not being able to view contents is typical of 14point solid bleached sulfate (SBS) cartons with heavy graphics because of the process used to coat and the type of print paperboard. Titanium dioxide, clay, or talc or similar is commonly applied to carton surfaces before printing to fill in the air holes between paper fibers and provide a smooth printing surface; but, light is also blocked. Printing follows this operation, and this adds to increased light blocking. The final coating is to protect the print, provide the desired surface (for example glossy or matte finish) and the carton from moisture gain and this coating can contain UV protection and/or be composed of polyethylene. Based on this analysis, it is my opinion that most consumers cannot fully view respective contents within cartons of JuniorMints, JuniorMints-King Size, and SugarBabies.
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V.B. Slack-fill exists within JuniorMints, JuniorMints-King Size, and SugarBabies cartons It is my opinion that Slack-fill exists within JuniorMints, JuniorMints-King Size, and SugarBabies cartons. The definition of slack-fill is defined in CFR 100.100 and in California Code 12606.2: “Non-functional slack-fill is the empty space in a package that is filled to less than its capacity…”
The cartons and their respective contents were considered in detail. Three methods – effective, “open here”, and actual, - for assessing if slack-fill exists were employed in this assessment. These definitions are discussed:
Effective slack-fill: Effective slack-fill represents what consumers would see if the carton was opened from the top of the carton.
“open here” slack-fill: When the top of the cartons is sealed with an adhesive, and there is an “open here” tab, the carton volume could be considered the height at the “open here” function. However, JuniorMints, JuniorMints-King Size, and SugarBabies did not have open here tabs below the carton top opening so this determination of slack-fill is not relevant.
Actual slack-fill: Actual slack-fill represents what volume of candy is in the carton. The geometry of the candy within the rectangular carton results in voids and lost volume. Candy geometry is shown in Figure D.
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Figure D. Different Geometries of Tootsie Candy JuniorMints SugarBabies
Accordingly, data was collected to determine if there was slack-fill according to two methods – effective, and actual - slack-fill.
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V.B.1. Method for Assessing Presence of Slack-fill
The existence and amount of Slack-fill was assessed using a sample size because it was not viable to collect and analyze the entire population of the JuniorMints, JuniorMints-King Size, and SugarBabies candy on the market to make these determinations. In the assessment of the existence of slack-fill, data was collected from samples of cartons sent from Clarkson Law Firm to my secure PO Box. Excel was used to record data. The process for assessing the presence and amount of slack-fill for JuniorMints, JuniorMints-King Size, and SugarBabies candy is described.
The process used was: 1. Obtain samples: Receive cartons of unopened JuniorMints, JuniorMints-King Size, and SugarBabies within a closed corrugated box from the Clarkson Law firm
Figure E. Opening of package from Clarkson Law firm
2.Verify and record: I verified cartons were not opened prior to evaluation and recorded the UPC, expiration date and manufacturing codes. These are shown in the following Tables.
Table 2: Reference information for JuniorMints
Summary Reference information Brand WReference Expiration Code Source Date Purchased UPC Junior Mints C157321-17:12-1711 none Rite Aid Thousand Oaks Thousand Oaks, CA 91362 10/25/2017 71720539446 Junior Mints E047322-16:04-1718 none Walgreens 310 S Lake Avenue Pasadena, CA 91101 10/24/2107 71720539446 Junior Mints E047322-16:04-1718 none Walgreens 310 S Lake Avenue Pasadena, CA 91101 10/24/2107 71720539446 Junior Mints E037312-10:40-1718 none Walgreens 310 S Lake Avenue Pasadena, CA 91101 10/24/2107 71720539446 Junior Mints E037312-10:40-1719 none Walgreens 310 S Lake Avenue Pasadena, CA 91101 10/24/2107 71720539446 Junior Mints E037312-10:40-1719 none Walgreens 310 S Lake Avenue Pasadena, CA 91101 10/24/2107 71720539446 Junior Mints E037312-10:40-1719 none Walgreens 310 S Lake Avenue Pasadena, CA 91101 10/24/2107 71720539446 Junior Mints E037312-10:40-1719 none Walgreens 310 S Lake Avenue Pasadena, CA 91101 10/24/2107 71720539446 Junior Mints E047322-16:04-1718 none Walgreens 310 S Lake Avenue Pasadena, CA 91101 10/24/2107 71720539446
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Table 3: Reference information for JuniorMints-King Size
Reference information
Brand Reference Expiration Code Source Date Purchased UPC Junior Mints King Size J1377311 1:47-1742 none The Grove Los Angeles 12/11/2017 71720539408 Junior Mints King Size J1377311 1:48-1742 none The Grove Los Angeles 12/11/2017 71720539408 Junior Mints King Size J1377311 1:48-1742 none The Grove Los Angeles 12/11/2017 71720539408 Junior Mints King Size J1377311 1:48-1742 none The Grove Los Angeles 12/11/2017 71720539408 Junior Mints King Size J1377311 1:48-1742 none The Grove Los Angeles 12/11/2017 71720539408 Junior Mints King Size J1377311 1:48-1742 none The Grove Los Angeles 12/11/2017 71720539408 Junior Mints King Size J1377311 1:56-1742 none The Grove Los Angeles 12/11/2017 71720539408 Junior Mints King Size J1377311 1:56-1742 none The Grove Los Angeles 12/11/2017 71720539408 Junior Mints King Size J1377311 1:56-1742 none The Grove Los Angeles 12/11/2017 71720539408 Junior Mints King Size J1377311 1:56-1742 none The Grove Los Angeles 12/11/2017 71720539408
Table 4: Reference information for SugarBabies
Summary Reference information Brand WReference Expiration Code Source Date Purchased UPC SugarBabies F027313-0909-1722 none Walgreens 310 S Lake Avenue Pasadena, CA 91101 12/11/2017 14200535453 SugarBabies F027313-0910-1722 none Walgreens 310 S Lake Avenue Pasadena, CA 91101 12/11/2017 14200535453 SugarBabies D037313-1343-1714 none Walgreens 310 S Lake Avenue Pasadena, CA 91101 12/11/2017 14200535453 SugarBabies D037313-1343-1714 none Walgreens 310 S Lake Avenue Pasadena, CA 91101 12/11/2017 14200535453 SugarBabies D037313-1343-1714 none Walgreens 310 S Lake Avenue Pasadena, CA 91101 12/11/2017 14200535453 SugarBabies D037313-1343-1714 none Walgreens 310 S Lake Avenue Pasadena, CA 91101 12/11/2017 14200535453 SugarBabies D037313-1343-1714 none Walgreens 310 S Lake Avenue Pasadena, CA 91101 12/11/2017 14200535453 SugarBabies D037313-1343-1714 none Walgreens 310 S Lake Avenue Pasadena, CA 91101 12/11/2017 14200535453 SugarBabies D037313-1343-1714 none Walgreens 310 S Lake Avenue Pasadena, CA 91101 12/11/2017 14200535453 SugarBabies D037313-1343-1714 none Walgreens 310 S Lake Avenue Pasadena, CA 91101 12/11/2017 14200535453
3. Measure and record height of candy fill level within the carton from the top of the carton.
Figure F. Measurement of height of candy with carton
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4. Measure candy weight a. Candy within carton was poured onto a tared scale (US-Orbit-Pro 2000g x 0.1g) weighed and the weight recorded.
Figure G. Weight of candy after poured from carton
5. Measure volume of candy within carton a. Fill 500mL graduated cylinder to known volume (above 100mL) with distilled water and record volume b. Pour weighed candy into 500mL glass graduated cylinder c. Measure and record new volume within cylinder
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Figure H. Final volume in cylinder after candy was added
6. Measure carton volume a. Measure (Caliper, General UltraTech) and record carton interior height, width, and depth to obtain entire carton volume
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Figure I. Measurement of interior height, width, and depth
b. If applicable, measure and record carton interior height at the “open here” tab, width, and depth to obtain volume of carton at “open here” height.
V.B.2. Analyze data to assess the amount of slack-fill As previously discussed, the existence and amount of Slack-fill was assessed using a sample size because it was not viable to collect and analyze the entire population of the JuniorMints, JuniorMints-King Size, and SugarBabies candy on the market. This sample size was used to determine a best estimate for the average and standard deviation of slack-fill within the entire the population of cartons. Excel was used to record data and for the analysis. Calculations used were the standard math of: addition, subtraction, multiplication, division. Volume calculations were:
1. Effective carton volume: Effective volume of carton = carton height × carton width × carton depth
2. Actual volume of candy within the carton: volume of candy within the carton
𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴 = height of candy in the carton × carton width × carton depth
Slack-fill calculations as well as accompanying statistics for the 2 methods of determining slack- fill were:
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1. Effective percent slack-fill: Effective percent slack-fill compares what the consumer effectively sees as missing volume
= 100 ×
𝑚𝑚𝑚𝑚𝑚𝑚𝑚𝑚𝑚𝑚𝑚𝑚𝑚𝑚 𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣 𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠 𝑖𝑖𝑖𝑖 𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐 𝐸𝐸𝐸𝐸𝐸𝐸𝐸𝐸 𝐸𝐸𝐸𝐸𝐸𝐸𝐸𝐸𝐸𝐸 𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠 𝑓𝑓𝑓𝑓𝑓𝑓𝑓𝑓 𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐 𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣 2. Actual percent slack-fill: Actual percent slack-fill compares the actual volume of candy versus the carton volume
= 100 ×
𝑚𝑚𝑚𝑚𝑚𝑚𝑚𝑚𝑚𝑚𝑚𝑚𝑚𝑚 𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎 𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣 𝑜𝑜𝑜𝑜 𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐 𝑖𝑖𝑖𝑖 𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐 𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴 𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠 𝑓𝑓𝑓𝑓𝑓𝑓𝑓𝑓 𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐 𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣
Statistical calculation functions used within Excel were AVERAGE for the mean:
= 𝑁𝑁 ∑𝑖𝑖=1 𝑋𝑋𝑋𝑋 𝑋𝑋 𝑁𝑁 and STDEV for the Sample Standard Deviation:
1 ,v S = JV _ I:;(xi - x)2 1 i=l
s = Sample Standard Deviation = Sample Average
𝑋𝑋Xi the value of each sample N= number of samples of cartons used
Details dimensional results are shown in Tables 5-7.
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Table 5: Volume of JuniorMints Candy cartons
Carton Length Carton Volume of Brand Depth (cm) (cm) Width (cm) carton (cc) JuniorMints 13.84 8.07 1.68 188.01 JuniorMints 13.84 8.07 1.68 188.01 JuniorMints 13.84 8.07 1.68 188.01 JuniorMints 13.84 8.07 1.68 188.01 JuniorMints 13.84 8.07 1.68 188.01 JuniorMints 13.84 8.07 1.68 188.01 JuniorMints 13.84 8.07 1.68 188.01 JuniorMints 13.84 8.07 1.68 188.01 JuniorMints 13.84 8.07 1.68 188.01 Average 13.84 8.07 1.68 188.01 Stnd Dev 0.00 0.00 0.00 0.00
Table 6: Volume of JuniorMints-King Size Candy cartons Carton Carton Carton Carton Brand Depth (cm) Length Width (cm) Volume JuniorMints-KingSize 13.15 6.70 1.44 127.16 JuniorMints-KingSize 13.15 6.70 1.44 127.16 JuniorMints-KingSize 13.15 6.70 1.44 127.16 JuniorMints-KingSize 13.15 6.70 1.44 127.16 JuniorMints-KingSize 13.15 6.70 1.44 127.16 JuniorMints-KingSize 13.15 6.70 1.44 127.16 JuniorMints-KingSize 13.15 6.70 1.44 127.16 JuniorMints-KingSize 13.15 6.70 1.44 127.16 JuniorMints-KingSize 13.15 6.70 1.44 127.16 JuniorMints-KingSize 13.15 6.70 1.44 127.16 Average 13.15 6.70 1.44 47.64 Stnd Dev 0.0 0.0 0.0 0.0
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Table 7: Volume of SugarBabies Candy cartons Carton Carton Carton Volume of Brand Depth (cm) Length Width (cm) carton (cc) SugarBabies 17.36 8.75 1.69 256.05 SugarBabies 17.36 8.75 1.69 256.05 SugarBabies 17.36 8.75 1.69 256.05 SugarBabies 17.36 8.75 1.69 256.05 SugarBabies 17.36 8.75 1.69 256.05 SugarBabies 17.36 8.75 1.69 256.05 SugarBabies 17.36 8.75 1.69 256.05 SugarBabies 17.36 8.75 1.69 256.05 SugarBabies 17.36 8.75 1.69 256.05 SugarBabies 17.36 8.75 1.69 256.05 Average 17.36 8.75 1.69 256.05 Stnd Dev 0.00 0.00 0.00 0.00
The Volume and weight of candy within cartons are summarized below:
Table 8: Volume and Weight of JuniorMints with carton Distance Open here from top of Initial Final distance Actual carton to Volume volume from top of weight of Brand candy (cm) water (cc) water (cc) carton candy (g) JuniorMints 5.74 220 280 none 99.2 JuniorMints 6.23 135 205 none 95.3 JuniorMints 6.13 250 325 none 99.3 JuniorMints 5.77 155 230 none 100.5 JuniorMints 5.31 140 215 none 97.6 JuniorMints 4.97 190 265 none 100.7 JuniorMints 5.39 175 250 none 98.6 JuniorMints 5.40 170 245 none 98.6 JuniorMints 5.73 155 230 none 96.6 Average 5.63 177 249 98.5 Stnd Dev 5.3 135 210 1.8
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Table 9: Volume and Weight of JuniorMints-King Size with carton Distance Open here from top of Initial Final distance Actual carton to Volume volume from top of weight of Brand candy (cm) water (cc) water (cc) carton candy (g) JuniorMints 5.74 220 280 none 99.2 JuniorMints 6.23 135 205 none 95.3 JuniorMints 6.13 250 325 none 99.3 JuniorMints 5.77 155 230 none 100.5 JuniorMints 5.31 140 215 none 97.6 JuniorMints 4.97 190 265 none 100.7 JuniorMints 5.39 175 250 none 98.6 JuniorMints 5.40 170 245 none 98.6 JuniorMints 5.73 155 230 none 96.6 Average 5.63 177 249 98.5 Stnd Dev 5.27 135 210 1.8
Table 10: Volume and Weight of SugarBabies with carton Distance Open here from top of Initial Final distance Actual carton to Volume volume from top of weight of Brand candy (cm) water (cc) water (cc) carton candy (g) SugarBabies 6.25 195 310 none 166.4 SugarBabies 5.01 160 275 none 171.3 SugarBabies 5.28 225 340 none 172.6 SugarBabies 5.45 160 280 none 171.4 SugarBabies 5.79 155 270 none 170.8 SugarBabies 5.95 180 295 none 170.9 SugarBabies 6.14 200 320 none 171.8 SugarBabies 5.99 240 360 none 172.3 SugarBabies 6.61 175 295 none 170.6 SugarBabies 5.88 195 310 none 171.3 Average 5.83 189 306 170.9 Stnd Dev 0.48 28 29 1.7
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V.B.3. Slack-fill Results for JuniorMints, JuniorMints-King Size, and SugarBabies Tootsie Candy
Data was used to determine if slack-fill existed and if so, how much. Previously mentioned equations were used to determine slack-fill using 2 methods. Results showed that: • Effective slack-fill ranged from 33.6 to 40.7% • Actual slack-fill ranged from 54.3 to 57.1%
This is shown in Table 11. Table 11: Slack-fill for JuniorMints, JuniorMints-King Size, and SugarBabies
Effective Actual slack Brand Brand slack fill fill JuniorMints-KingSize Average 37.5% 57.1% Stnd Dev 3.8% 2.7% JuniorMints Average 40.7% 61.3% Stnd Dev 2.9% 2.7% SugarBabies Average 33.6% 54.3% Stnd Dev 2.8% 1.0%
Interestingly, the average slack-fill on the JuniorMints-King Size was slightly lower that the slack-fill on the JuniorMints. This was because JuniorMints contained a larger amount of candy (3.5oz versus 2.6oz in the JuniorMints-King Size) and was in a larger box that the JuniorMints- King Size.
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V.C. Slack-fill is primarily nonfunctional slack-fill It is my opinion that the slack-fill within carton of JuniorMints, JuniorMints-King Size, and SugarBabies is primarily nonfunctional. This opinion is detailed in the following 6 sections that correspond to the 6 criteria in CFR 100.100 and in California Code 12606.2. These sections are: V.C.1, V.C.2, V.C.3, V.C.4, V.C.5, and V.C.6. The Figure below demonstrates the percent of functional and nonfunctional effective slack-fill explained within this section. It is important to note that the Effective nonfunctional slack -fill equals the Actual nonfunctional slack-fill when the space between the candy is subtracted as functional slack-fill from Actual slack-fill. This is because Actual slack-fill includes the space between the candy.
Figure J Functional and nonfunctional slack-fill
Functional and nonfunctional slack-fill
70.0%
60.0%
50.0%
40.0%
30.0%
20.0"/4
10.0"/4
0.0% JuniorMi nt s-KingSize JuniorMints SugarBabies
• Effective slack-fill
• Actual slack-fill
• Actual functional slack-fill relat ed t o space between candy
Actual nonfunct ional slack fill
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Table 12 Summary of functional and nonfunctional slack-fill
Space between Actual Effective slack- candy functional nonfunctional Brand fill Actual slack-fill slack-fill slack fill JuniorMints-KingSize 37.5% 57.1% 19.6% 37.5% JuniorMints 40. 7"/4 61.3% 20.6% 40. 7"/4 SugarBabies 33.6% 54.3% 20. 7"/4 33.6%
V.C.1. Slack-fill is nonfunctional in the context of criteria 1 because the slack-fill does not protect the JuniorMints, JuniorMints-King Size, and SugarBabies It is my opinion that slack-fill is nonfunctional in the context of criteria 1 because the slack-fill does not protect the JuniorMints, JuniorMints-King Size, and SugarBabies. My rationale is based on the primary function of food packaging being to protect product during the shelf life, specific product shapes, and collected data. This includes protecting against product deterioration and providing physical product protection. It is my opinion that the approximate slack-fill ranges determined in V.B. are not needed to protect the contents from: product deterioration or physical harm. And, that no slack-fill is required to provide product protection. The two sections below address how the excess slack-fill was not needed to protect the product. The sections are: V.C.1.1 and V.C.1.2.
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V.C.1.1 Slack-fill is nonfunctional since it does not protect against product deterioration Slack-fill is not needed to protect against product deterioration and so the slack-fill is nonfunctional in this context. Product protection is a vast area of food packaging due to the concern over food safety and the numerous deteriorative reactions that occur within foods. The slack-fill in the cartons seen in V.B. of this report was considered in terms of its role in providing needed protection from deteriorative reactions in foods. There are 5 major deteriorative reactions in food. These are: lipid oxidation, microbial, moisture loss and gain, non-enzymatic browning, enzymatic browning. Reactions are a function of the food and the environment. Packaging is designed to prevent/stall deteriorative reactions on a product by product basis. For this reason, product ingredients, and product characteristics are relevant. Ingredient statements contained in Table 13 are used for reference.
Table 13: Ingredient statements of Tootsie Candy JuniorMints
Total Fat 3g
Cholesterol 0mg
JuniorMints-King Size Persemng Per conlalner %DV' 'I, DV' ...... ,...... , 'I, IN' 'lo IN' Total Fat 2.5g 3% 7g 9¾ --Tot.al Carb. 9'/, 65g 24'1, 1.5g - 8¾ 4g 20% 0'1, :lg 0'1, 0g 0g 6_'9__ 0mg O'I, 0mg 0% 50\ 6 g 120\ 0mg 0% 10mg 0% 1g Omcg 0% Omcg 0% 1mg 611mg II 3mg 0% 7mg 0% 37mg Ol 11.. 'llltll DlliyVQID\1!ell)')U i... nu:flal>Jln«JI naSIMlg~loodcoo l11dolylill2.lll0a1D11111illfil•t.pad•I -
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SugarBabies Nu ration Facts :":'JOIL.,..,_, ..,=' Sf'IV ng S11e 27 Pli!Ces (39g' STAACtt MOOflCD 'M£f ~NP.AL. Alf;) $f rvmg!. Per Container abol t 4 5 AATlf-lCIAt FLA'JOR$. coortCTlvl-0. $GU.if., SALT r..AMMll Cl).00 ~ICW.. ta.OPS Amount'"• s-tng (INCLUDING fO&C YW.OW fG 40 VEU.l)W .C,a::lorl:::,:::•.::,•,::16~0-_.C.,::a:,::1nrf~S~l:::ro~m-,:F~at~10 6,AN08LLJ I) <;OY .ECfHIK 'MITE M • % Dalty Value" OIL Total fat 1.5g 2% EGG MAY BE PflESENT.
Saturated Fat 0.5g ~ =~~\N 38019 USA Sodium 40'!2L_ .. ··--- c TRI, LLC Total Cartlobydrate 36g _ _ l 2% MADE IN USA Sugars 29g wwwtool.Slecom Protein Ilg 06-T0600C-SBSTf
Not as,gni!lC!lrllSOtJfteolnns lat. CholollerOI. dM;ld()'tiber,vitaminA,vi~l'l~W'dl'OII "Pe Interestingly, the regular size JuniorMints carton contains 0.9oz more than the King Size JuniorMints. None of these deteriorative reactions depend on the amount of headspace within the carton. The reasons why are explained below for each reaction. V.C.1.1a. Lipid oxidation is not a concern since the amount of unsaturated fats is zero and the reaction cannot occur. V.C.1.1b Microbial growth is a function of product acidity (pH), moisture content, nutrient content, oxygen, and light. Tootsie candy considered does not support microbial growth because it does not have the pH, moisture content, nutrients conducive to microbial growth. V.C.1.1c Moisture loss and gain likely does not occur to and from the Tootsie candy to a significant extent during product shelf life. This is because the carton minimal protection from moisture loss or gain. And, since the product is sold by weight, retaining moisture is critical to maintaining the correct amount of candy within the carton throughout the product shelf life. To protect against moisture loss or gain the candy – JuniorMints, JuniorMints-King Size, and SugarBabies - have varying degrees of protective coatings on the candy itself that are applied as part of food processing. These coating retard against moisture loss and gain which could result in the candy drying out or becoming sticky. During testing in Section V.B., none of the candy was dry, or sticky unless it was damaged in its exterior. The high degree of slack-fill did not prevent product damage. This is shown in Figure K below. 31 Case 2:17-cv-02664-DSF-MRW Document 77-13 Filed 03/05/18 Page 34 of 47 Page ID #:1622 Figure K JuniorMints cracked and the filling sticking to side of inner carton The paperboard and sealing methods used to enclose the contents does not prevent moisture loss or gain to a significant degree and carton ends are glued but contain gaps on the sides allowing the free flow of air. The carton is simply not designed to prevent moisture loss or gain. And, hence, the additional headspace range seen in Section V.B. does not play a role in moisture loss or gain since the product is not protected to any significant degree by the carton or its ambient headspace from moisture changes. Due to the difference between effective and actual slack-fill, significant space exists between the product when within the carton. This demonstrates that extra headspace would not add significantly to the ability of candy to shift within the carton. V.C.1.1d and V.C.1.1e: Non-enzymatic browning is a reaction between proteins and reducing sugars and since there is an absence of protein in all candy, this reaction cannot occur within JuniorMints and SugarBabies candy. Enzymatic browning (typically seen in the browning of apple slices) can also be assumed not be and concern since compounds needed for the reaction are not within the Tootsie candy. 32 Case 2:17-cv-02664-DSF-MRW Document 77-13 Filed 03/05/18 Page 35 of 47 Page ID #:1623 V.C.1.2. Slack-fill is nonfunctional since it does not protect product from distribution, retail and consumers hazards that may damage product. Slack-fill is not needed to protect product from distribution, retail and consumers hazards that may damage product and so the slack-fill is nonfunctional in this context. Packaging is designed to protect against dynamic and static loads during distribution. The package system is the composite of all packaging used. In the case of the Tootsie candy considered it is: a corrugated box, paperboard carton, and adhesive used to seal the carton. Dynamic and static stresses occur in transport (plane, truck, boat), storage, and handling by forklift, humans, and machines. It is a standard practice that the carton within the corrugated cases, would be packed tightly to reduce scuffing exterior carton graphics and this would limit the effects of cartons bowing out in the middle sections. In fact, reduced headspace would reduce the longest dimension of the carton and add more rigidity to the carton to provide support during distribution. The excess space in the carton seen in Section V.B. was considered in terms of its role in providing needed physical protection throughout the distribution process. Corrugated boxes are designed to support the weight of the product held in the box if a product cannot support its own weight. This is standard in packaging and while the exact pallet patterns, stack heights, corrugated edge crush values are unknown, it can be assumed that the corrugated cases are designed properly and will support the carton weight to withstand dynamic and static stresses. The additional slack-fill volume does not provide any cushioning and the added height of the carton does not provide support. In fact, the added height would result in carton crushing if cartons are distributed improperly since crushing would occur because the cartons are not full. In addition, the excess carton headspace within the carton would result in more product movement within the carton during distribution. This extra movement may result in product damage. The carton size not unusual or awkward in terms of handling in distribution and at retail and the slack-fill is not warranted due to distribution, retail, or consumer hazards. The process does not require slack-fill to any extent to achieve product protection. The slack-fill in the carton headspace does not protect JuniorMints, JuniorMints-King Size, and SugarBabies thus does not meet criteria 1 of CFR section 100.100 nor California Code 12606.2. 33 Case 2:17-cv-02664-DSF-MRW Document 77-13 Filed 03/05/18 Page 36 of 47 Page ID #:1624 V.C.2. Slack-fill is nonfunctional in the context of criteria 2 because the slack-fill is not needed in the machinery requirements to enclose the JuniorMints, JuniorMints-King Size, and SugarBabies It is my opinion that slack-fill is nonfunctional in the context of criteria 2 because the slack-fill is not needed in the machinery requirements to enclose the JuniorMints, JuniorMints-King Size, and SugarBabies. I reached this opinion based on my understanding of carton sealing machinery and adhesives. The rationale is shared in the next 2 sections: V.C.2.1. and V.C.2.2. V.C.2.1. Slack-fill is nonfunctional in terms of enabling the carton sealing machinery used to enclose product Carton sealing machinery to enclose product does not require slack-fill and so the slack-fill is nonfunctional in this context. While the specific machine used to seal cartons has not been disclosed to me, it can be assumed to be similar to those used in other high-speed carton sealing operations of which I am familiar. After carton erecting and filling, cartons flaps are closed and the carton is sealed. This operation requires application of an adhesive to one or both flaps, contact between the 2 flaps being sealed, and dwell time and/or temperature/pressure to enable sealing to occur. This enclosing process is independent of the amount of slack-fill within the carton and the fill level required is only just below the 2 flaps being sealed. V.C.2.2. Slack-fill is nonfunctional in terms of enabling proper adhesion to enclose product within the carton Adhesives and the sealing operation to enclose product in a carton do not require slack-fill and so the slack-fill is nonfunctional in this context. Adhesives are designed for specific applications and in this case, I assume that the adhesive is designed for sealing the paperboard cartons considered. Sealing paperboard cartons has been done for many of years, adhesives have evolved, are common and have specific requirements regarding their suitability for high speed operations. While the specific adhesive has not been disclosed to me, it can be assumed to be similar to those used in other high-speed paperboard carton sealing operations. While, innovations and technology (such as plasma surface treating) could be employed to increase bond strength, the actual enclosing operation is the same and does not require slack-fill. The process is the one described in V.C.2.1. It is important to note that in my experience, the process 34 Case 2:17-cv-02664-DSF-MRW Document 77-13 Filed 03/05/18 Page 37 of 47 Page ID #:1625 of adhesive application is refined, automated, and commonly tightly controlled to ensure the uniform and optimal amount of adhesive. This is because of the economics of: rejects within the manufacturing facilities or at retail due to excess adhesive, the cost of adhesives, the need for adhesives to remain in defined areas versus on carton exteriors that would interfere with carton graphics, and cartons inadvertently opening during distribution or retail environments due to improper sealing. For this reason, it can be assumed that adhesive application and use is optimized for the cartons considered. Product pieces may rest upon one another in odd orientation immediately after filling. This is not an uncommon assurance in filling operations. And, in-line (the next step in a production process) vibration and the conveyor itself after filling allows product to equilibrate to the same height within the carton. While a piece of candy may protrude from the remaining equilibrated candy, Table 14 shows that the open space between the candy in the Tootsie cartons would provide ample space without slack-fill of allow a shift to occur during the sealing operation. In any case, slack-fill is not needed to accommodate the unusual occurrence of excess adhesive since the adhesive is FDA approved or due to the sealing process itself. Further, tamper evidency requires proper adhesion that demonstrates to consumers that the carton has not been opened before their use. This is accomplished through the use of an adhesion between the 2 glue flaps that exhibits fiber tear on the 2 glue flaps upon opening. There are numerous cartons on the market without slack-fill that have been enclosed using packaging machinery. The slack-fill in the carton headspace is not needed to align with the machinery requirements to enclose- JuniorMints, JuniorMints-King Size, and SugarBabies thus does not meet criteria 2 of CFR section 100.100 nor California Code 12606.2. 35 Case 2:17-cv-02664-DSF-MRW Document 77-13 Filed 03/05/18 Page 38 of 47 Page ID #:1626 V.C.3. Slack-fill is primarily nonfunctional in the context of criteria 3 because the slack-fill does not result from JuniorMints, JuniorMints-King Size, and SugarBabies settling during shipping and handling It is my opinion that slack-fill is nonfunctional in the context of criteria 3 because the slack-fill does not result from JuniorMints, JuniorMints-King Size, and SugarBabies appreciably settling during shipping and handling. I reached this opinion based on: product density and geometry and carton geometry, calculated effective and actual volume of candy with each carton and the lack of labeling explaining that product settling may occur during shipping and handling. The rationale is shared in the next 3 sections: V.C.3.1, V.C.3.2, and V.C.3.3. V.C.3.1 Slack-fill is not the result of settling during shipping and handling based on product density and geometry Slack-fill is nonfunctional due to product density and geometry. Settling does occur in low density products; but, not in products of sufficient density that allows product to settle upon filling. The product density of JuniorMints, JuniorMints-King Size, and SugarBabies is higher than that of water. Table 14 Candy Density Density of candy Brand Brand (g/cc) JuniorMints-KingSize Average 1.4 Stnd Dev 0.1 JuniorMints Average 1.4 Stnd Dev 0.1 SugarBabies Average 1.5 Stnd Dev 0.0 Product at this density would be expected to settle immediately upon filling. Products with complex geometry can become geometrically aligned to take the shape of the carton and hence consume less space after shipping and handling. The complexity of the geometry of the candy means that it is unlikely to align with carton geometry. For example, differently shaped candy is not likely to stack in an oriented manner reminiscent of the rectangular carton during shipping 36 Case 2:17-cv-02664-DSF-MRW Document 77-13 Filed 03/05/18 Page 39 of 47 Page ID #:1627 and handling to results in appreciable slack-fill. And, JuniorMints and SugarBabies are elliptical respectively and hence cannot conform to the shape of the rectangular carton and pack without space between candy pieces. V.C.3.2. Slack-fill is not the result of settling during shipping and handling because difference between the effective and actual volume shows that settling has not occurred to an appreciable extent Slack-fill is nonfunctional based on the difference between effective and actual volume. While some settling may have occurred, the difference between the effective and actual volume of candy demonstrates that the product does not “settle” fully to fill gaps and that there still considerable air pockets between candy pieces within the carton after shipping and handling. Table 18 shows the difference between the effective and actual volume of candy within the carton. The voids between the candy within the carton is still 24.9-53cc after shipping and handling. This volume demonstrates that slack-fill is likely not the result of settling during shipping and handling. Table 15 Difference between the effective and actual volume Difference between effective volume and Brand Brand actual volume (cc) JuniorMints-KingSize Average 24.9 Stnd Dev 6.2 JuniorMints Average 38.8 Stnd Dev 6.3 SugarBabies Average 53.0 Stnd Dev 8.4 As mentioned earlier, the space between candy pieces and the space above the candy in the carton is the Actual slack-fill. The space between the candy is functional in that it is needed for proper orientation of candy within the carton. The difference between Effective and Actual slack-fill demonstrates the amount of functional slack-fill between the pieces of candy within the carton. The volumes in the Table above represent the Actual functional slack-fill. It is important 37 Case 2:17-cv-02664-DSF-MRW Document 77-13 Filed 03/05/18 Page 40 of 47 Page ID #:1628 to note that this functional slack-fill only relates to the Actual slack-fill. When this space between the candy functional slack-fill is determined the Actual nonfunctional slack-fill equals the Effective nonfunctional slack-fill. This non-functional slack-fill is: 37.5%, 40.7%, 33.6% for JuniorMints-King Size, JuniorMints, and SugarBabies respectively. V.C.3.3. Slack-fill is not the result of settling during shipping and handling based on the lack of labeling highlighting that product settling during shipping and handling may occur Slack-fill is nonfunctional based on the lack of labeling suggesting that product settling during shipping and handling may occur. The labeling on packaging for foods such as low-density cereal and chips, that do break and settle during shipping and handling is to inform the consumer that “some settling may have occurred”. This labeling is missing on the packaging that contains JuniorMints and SugarBabies and present on the carton containing JuniorMints-King Size even though the levels of settling are the same as in all cartons containing JuniorMints since it is the same candy. Further, as shown in Table 11, the JuniorMints-King Size has a degree of slack-fill between that of JuniorMints and SugarBabies suggesting the lack of relevance settling. The slack-fill in the carton headspace is not the result of settling during shipping and handling of JuniorMints, JuniorMints-King Size, and SugarBabies thus does not meet criteria 3 of CFR section 100.100 nor California Code 12606.2. 38 Case 2:17-cv-02664-DSF-MRW Document 77-13 Filed 03/05/18 Page 41 of 47 Page ID #:1629 V.C.4. Slack-fill is nonfunctional in the context of criteria 4 because the slack-fill within the package is not necessary to perform a specific function for JuniorMints, JuniorMints-King Size, and SugarBabies It is my opinion that slack-fill is nonfunctional in the context of criteria 4 because the slack-fill within the package is not necessary to perform a specific function for JuniorMints, JuniorMints- King Size, and SugarBabies. There are many specific functions of packaging to aid in food preparation and consumption. As specified in the CFR and the California Code, the function needs to be inherent to the nature of the food and clearly communicated to consumers. Cartons do not have an “open here” tab and thus no slack-fill is required to accommodate this dispensing feature. The “to close-insert tab in slot” and “open other end” tabs on the top and bottom of the carton are the only specific functions communicated to consumer. I arrived at my opinion based on the carton functions of opening and dispensing through the opening on the top of the carton and thus opening the carton and dispensing candy from this carton top opening. The slack-fill in the carton headspace is not needed to enable a specific function of the JuniorMints, JuniorMints-King Size, and SugarBabies package to perform thus does not meet criteria 4 of CFR section 100.100 nor California Code 12606.2. 39 Case 2:17-cv-02664-DSF-MRW Document 77-13 Filed 03/05/18 Page 42 of 47 Page ID #:1630 V.C.5. Slack-fill is nonfunctional in the context of criteria 5 because the JuniorMints, JuniorMints-King Size, and SugarBabies package is not suitable for reuse, as a durable commemorative or as a promotional package It is my opinion that slack-fill is nonfunctional in the context of criteria 5 because the JuniorMints, JuniorMints-King Size, and SugarBabies package is not suitable for reuse, as a durable commemorative or as a promotional package. I arrived at my opinion based on the carton’s single use function and absence of commemorative or promotional advertising. This rationale is discussed in the following 2 sections: V.C.5.1. and V.C.5.2. V.C.5.1. Slack-fill is nonfunctional since slack-fill is not needed because the carton is not designed or intended for reuse. Slack-fill is nonfunctional since slack-fill is not needed because the carton is not designed or intended for reuse. The carton construction of 14-point solid bleached sulfate does not suggest that reuse is likely or intended. If reuse was intended, the carton would be made of a more robust structure to facilitate reuse. The “to close-insert tab in slot” tab on JuniorMints, JuniorMints- King Size, and SugarBabies cartons allows for use and not easy or implied reuse. Further, the recycling symbol on the carton suggests the carton is to be recycled and not reused V.C.5.2. Slack-fill is nonfunctional since slack-fill is not needed because the carton is not designed commemorative or promotional purposes. Slack-fill is nonfunctional since slack-fill is not needed because the carton is not designed commemorative or promotional purposes. There is no mention of commemorative or promotional purposes of cartons of JuniorMints, JuniorMints-King Size, and SugarBabies candy. The slack-fill in the carton headspace is not due to the need for carton reuse, or commemorative or promotional purposes for the JuniorMints, JuniorMints-King Size, and SugarBabies package and thus criteria 5 of CFR section 100.100 nor California Code 12606.2 is not met. 40 Case 2:17-cv-02664-DSF-MRW Document 77-13 Filed 03/05/18 Page 43 of 47 Page ID #:1631 V.C.6. Slack-fill is nonfunctional in the context of criteria 6 because the carton containing JuniorMints, JuniorMints-King Size, and SugarBabies slack-fill does not have to occur to enable food labeling, pilfering, handling, or tamper resistance. It is my opinion that slack-fill is nonfunctional in the context of criteria 6 because the JuniorMints, JuniorMints-King Size, and SugarBabies slack-fill does not have to occur to enable food labeling, pilfering, handling, or tamper resistance. The added space that results in slack-fill does not restrict pilfering, optimize handling, or impact tamper evidency. I arrived at my opinion based on the package size, labeling requirements, pilferage, and handling and tamper evidency. This is discussed on the following 4 sections: V.C.6.1., V.C.6.2., V.C.6.3., and V.C.6.4. V.C.6.1. Slack-fill is nonfunctional since slack-fill is not needed for sufficient space for food labeling purposes. Slack-fill is nonfunctional since slack-fill is not needed for sufficient space for food labeling purposes. Labeling on the principal display panel and other areas of the carton for nutritional purposes is governed by CFR 21 as shown in Figure K. The principal display panel is the height times the width of the carton. Principal display panels are shown in Table 16 for JuniorMints, JuniorMints-King Size, and SugarBabies cartons. Table 16 Principal display panel area Principal Display Brand Brand Panel (cm2) JuniorMints-KingSize Average 88.06 JuniorMints Average 111.65 SugarBabies Average 151.96 41 Case 2:17-cv-02664-DSF-MRW Document 77-13 Filed 03/05/18 Page 44 of 47 Page ID #:1632 Figure L Visual showing that the JuniorMints carton is larger than JuniorMints-King Size carton 42 Case 2:17-cv-02664-DSF-MRW Document 77-13 Filed 03/05/18 Page 45 of 47 Page ID #:1633 Figure M Principal display panel within CFR21 TITLE 21--FOOD P.ND DRUGS CHAPTER ! --FOOD P.ND DRUG P.DMINISTRATION DEPP.RTMENT OF HEP.LTH P.ND HUM..o.N SERVICES SUBCHAPTER B--FOOD FOR HUM..o.N CONSUMPTION PP.RT 101 FOOD LP.SELING Subp art A--General Pr ovisi o ns Se c . 101 . 1 Pr incipal dis play pane l o = package =o r m =ood . The t e r m principal displa y p a nel a s it applie s to =ood in package =o r m and a s us ed in this par t, me ans the par t o :: a labe l that i s mos t like ly to b e dis played., p r e s e nted., s hown, o r e xamined unde r cus tomar y conditions o :: dis play ::o r r e tail s ale. The p r incipal dis play pane l s hall b e lar g e e nough to accom.~odate all the mandator y labe l in::o r mation r e quir ed to b e place d. the r eon by this par t with clar ity and. cons picuous ne ss and. without obs cur ing d e s ign, vigne tte s , o r c r owding . Whe r e package s b e a r al~e r nate p r incipal dis play pane l s , in::o r mation r e quir ed to b e place d on the p r incipal dis play pane l s hall b e duplicated on e ach p r incipal dis play pane l . Fo r the pur pos e o = obtaining uni=o r m type s ize in d e clar ing the quantity o = conte nts =o r all package s o = s ubs tantially the s ame s ize , the t e r m area o f the principa l displa y p a nel me ans the a r e a o = the s ide o r s u.r=ace that b e a rs the p r incipal dis play pane l, which a r e a s hall b e: (a ) In the cas e o = a r e ctangular package whe r e one e ntir e s ide p r ope r ly can b e cons ide r ed to b e the p r incipal dis play pane l s ide , the p r odu=t o = the he ight time s the width o = that s ide ; (bl In the case o: a cylindr ical or near ly cylindr ical container , 40 percent o: the product o = the he ight o = the containe r time s the cir cum=e r e nce ; (c J In the cas e o : any othe r wis e s haped containe r , 40 p e r c e nt o : the total s ur:ace o : the containe r : Provided, however, That whe r e s uch =ontaine r p r e s e nts an obvious "pr incipal dis play pane l" s uch a s the top o = a t r iangular o r cir cular package o = chees e , the a r e a s hall cons i s t o = the e ntir e top s ur=ace. In d e t e r mining the a r e a o = the p r incipal dis play pane l, e xclude tops , bottoms , =1ange s at tops and bot~oms o = cans , and s houlde rs and ne cks o = bottle s o r jars . In the cas e o = cylindr ical o r ne a r ly cylindr ical containe rs , in=o r mation r e quir ed by this par t to appe a r on the p r incipal dis play pane l s hall appe a r within that 40 p e r c e nt o = the cir cum=e r e nce which i s mos t lik-e ly to b e dis played, p r e s e nted, s hown, o r e xamined unde r cus tomar y conditions o = dis play =o r r e tail s ale. Subsequent sections define requirements for nutritional labeling and other requirements. These requirements do not require a carton larger than the effective volume of candy. This is exemplified by the large amount of space consumed by graphics and brand name lettering. Slack-fill is nonfunctional since slack-fill is not needed for sufficient space for food labeling purposes on the principal or other display panels to be in compliance nutritionals within 101.9 and other food labeling regulations within the CFR. 43 Case 2:17-cv-02664-DSF-MRW Document 77-13 Filed 03/05/18 Page 46 of 47 Page ID #:1634 V.C.6.2. Slack-fill is nonfunctional since extra space due the slack-fill likely does not provide sufficient additional space to inhibit pilfering. Slack-fill is nonfunctional since extra space due the slack-fill likely does not provide sufficient additional space to inhibit pilfering. While size does not define the degree of pilfering, product within larger size cartons are less easily stolen. And, the cost and volume of theft of products often warrants cartons that are larger than the product. For example, high price (~$2,000) hearing aids are commonly sold in cartons larger than a hearing aid to inhibit pilfering. The size candy of concern is called “theater candy” and can be sold behind counters which limits pilfering via the use of a gatekeeper and within candy aisles in convenience, grocery, and other venues. In these various venues, various products within the candy aisle are smaller in size and thus more easily pilfered than paperboard cartons. V.C.6.3. Slack-fill is nonfunctional since extra space due the slack-fill does not provide sufficient space to enable superior handling. Slack-fill is nonfunctional since extra space due the slack-fill does not provide sufficient space to enable superior handling. The current size carton is not necessarily the optimum size for handling since many candy carton sizes exist and are handled within similar distribution systems. Handling includes handling during manufacturer, filling, packaging, storing, distributing, in retail environments, by consumers, and in the post-consumer environment. It is my opinion that these handling processes would not be impeded by a smaller carton without the slack-fill determined in Section V.B. Interestingly, if the carton did not exhibit slack-fill, less handling would occur. This is because less material would need to be produced, shipped, handled within the distribution environment, more facings would be possible on the store shelf resulting in less out-of-stocks, and less labor and handling. Further, the package would be more environmentally sustainable if it was reduced in size and this smaller size would result in less overall production, shipping, and recycled and overall handling of paperboard. V.C.6.4. Slack-fill is nonfunctional since extra space due the slack-fill does not impact the degree of tamper evidency 44 Case 2:17-cv-02664-DSF-MRW Document 77-13 Filed 03/05/18 Page 47 of 47 Page ID #:1635 Slack-fill is nonfunctional since extra space due the slack-fill does not impact the degree of tamper evidency. Tampering is made evident by fiber tear on the 2 flaps if the carton is opened from the top by the using the “to close-insert tab in slot” tab. The slack-fill in the carton does not enable food labeling, pilfering, handling, or tamper resistance for the JuniorMints, JuniorMints-King Size, and SugarBabies package and thus criteria 6 of CFR section 100.100 nor California Code 12606.2 is not met. CONCLUSION For the reasons presented above, it is my opinion that: 1. Tootsie cartons containing JuniorMints, JuniorMints-King Size, and SugarBabies do not allow the consumer to fully view their respective contents. This is explained in Section V.A. 2. Tootsie cartons containing JuniorMints, JuniorMints-King Size, and SugarBabies have slack-fill. This is explained in Section V.B. 3. Tootsie cartons containing JuniorMints, JuniorMints-King Size, and SugarBabies exhibit a high degree non-functional slack-fill as compared to the small degree of functional slack- fill. This is explained in Section V.C. Executed on February 25, 2018 Claire Koelsch Sand, Ph.D. Claire Koelsch Sand, Ph.D. CEO and Founder (!) - 1 Stillwater, Minnesota ;• . 612-807-5341 ::::r:: u < Technology a. & Research [email protected] www.PackagingTechnologyandResearch.com 45 Case 2:17-cv-02664-DSF-MRW Document 77-14 Filed 03/05/18 Page 1 of 2 Page ID #:1636 1 CLARKSON LAW FIRM, P.C. Ryan J. Clarkson (SBN 257074) 2 [email protected] Shireen M. Clarkson (SBN 237882) 3 [email protected] Bahar Sodaify (SBN 289730) 4 [email protected] 9255 Sunset Blvd., Ste. 804 5 Los Angeles, CA 90069 Tel: (213) 788-4050 6 Fax: (213) 788-4070 7 Attorneys for Plaintiff Ketrina Gordon 8 IN THE UNITED STATES DISTRICT COURT 9 FOR THE CENTRAL DISTRICT OF CALIFORNIA 10 11 KETRINA GORDON, individually and ) Case No. 2:17-cv-02664-DSF-MRW on behalf of all others similarly ) situated, ) [CLASS ACTION] 12 ) P.C. , 13 Plaintiff, ) DECLARATION OF FORREST IRM ) MORGESON PH.D. IN SUPPORT F vs. ) OF PLAINTIFF’S MOTION FOR 14 AW L ) CLASS CERTIFICATION 15 TOOTSIE ROLL INDUSTRIES, INC., ) and DOES 1 through 10, inclusive, ) Sunset Blvd.,Suite 804 LARKSON LARKSON ) Los Angeles, CA 90069 CA Angeles, Los C 16 Defendants. ) 9255 17 ) ) 18 ) ) 19 ) ) 20 ) ) 21 ) ) 22 ) 23 24 25 26 27 28 DECLARATION OF FORREST MORGESON, PH.D. Case 2:17-cv-02664-DSF-MRW Document 77-14 Filed 03/05/18 Page 2 of 2 Page ID #:1637 1 DECLARATION OF FORREST MORGESON, PH.D. 2 I, FORREST MORGESON, declare as follows: 3 1. I am a director of research at the American Customer Satisfaction Index 4 (ACSI) retained for the above-mentioned case. I have personal knowledge of the 5 facts set forth in this declaration and, if called as a witness, I could and would testify 6 competently thereto. Attached hereto as Exhibit A is my curriculum vitae. 7 2. I make this declaration in support of Plaintiff's motion for class 8 certification. Attached hereto as Exhibit B is a true and correct copy of my expert 9 report containing my opinions regarding the products at issue which are covered 10 within the definition of Theater Box Candy referenced in my report. 11 "SI" 0 c..i~$ 12 p... .t:: 8 I declare under penalty of perjury under the laws of the United States and the g· a~ µ.. ~..:i:: 13 State of California that the foregoing is true and correct. Executed on ~~u <( ...- tfl ...l a:i ~ z ..... ~ 14 /fl~rc/2 ~ 2018 at Ann Arbor, Michigan. 0 ~ b£ "'§ ~ ~ Cl) u, 15 ....1 tr) 0 u tr) ...,l N ~ 16 -7LY 17 Forrest Morgeson, Ph.D. 18 19 20 21 22 23 24 25 26 27 28 DECLARATION OF FORREST MORGESON, PH.D. Case 2:17-cv-02664-DSF-MRW Document 77-15 Filed 03/05/18 Page 1 of 16 Page ID #:1638 EXHIBIT A Case 2:17-cv-02664-DSF-MRW Document 77-15 Filed 03/05/18 Page 2 of 16 Page ID #:1639 EXHIBIT 1 Forrest V. Morgeson III, Ph.D. Director of Research and Global CSI Manager, American Customer Satisfaction Index LLC Instructor, Department of Marketing, Michigan State University Phone: +1.734.649.6818; Email: [email protected] PROFESSIONAL EXPERIENCE American Customer Satisfaction Index, LLC 2009-Present: Director of Research and Global CSI Manager •Director of Research: Responsible for managing all academic research and advanced statistical analysis for the American Customer Satisfaction Index •Global CSI Manager: Responsible for recruiting, managing, and training ACSI international partner organizations through ACSI's Global CSITM program. Country-groups managed and trained include Barbados, China, Colombia, Dominican Republic, Honduras, India, Indonesia, Kuwait, Malaysia, Mexico, Peru, Puerto Rico, Saudi Arabia, Serbia, Singapore, South Africa, South Korea, Turkey, Vietnam, and the United Kingdom. •Customer Satisfaction Project Management: Responsible for managing domestic and international custom research projects for ACSI, including questionnaire design, data collection, specialized complex model building and statistical analysis, report production, and the presentation of deliverables Michigan State University, Department of Marketing 2016-Present: Instructor in the “Master of Science in Marketing Research Program” •Aggregate student evaluation “Instructor Quality Rating” of 4.5 (out of 5.0) Eastern Michigan University, Department of Political Science 2002-2013: Adjunct Professor of Political Science University of Michigan, Stephen M. Ross School of Business 2002-2009: Research Scientist & Lead Statistician, National Quality Research Center CFI Group International 2008-2009: Project Manager and Consultant •Worked on-site and managed multiple stages of a cross-national CSI tracking study for a large, multi-national African telecommunications company 11 Case 2:17-cv-02664-DSF-MRW Document 77-15 Filed 03/05/18 Page 3 of 16 Page ID #:1640 PUBLICATIONS & SCHOLARLY ACTIVITIES I. Books and Book-Length Manuscripts Morgeson III, Forrest V. (2014). Citizen Satisfaction: Improving Government Performance, Efficiency, and Citizen Trust. N.Y., N.Y.: Palgrave MacMillan. Bryant, Barbara, Claes Fornell and Forrest V. Morgeson III (2008). American Customer Satisfaction Index Methodology Report. Milwaukee, WI: American Society for Quality. Fornell, Claes (2007). The Satisfied Customer: Winners and Losers in the Battle for Buyer Preference. N.Y., N.Y.: Palgrave Macmillan. (Editorial assistance) Morgeson III, Forrest V. (2007). ACSI Modeling Manual: Processes and Methods for Creating ACSI Models. Ann Arbor, MI: National Quality Research Center. Fornell, Claes, David VanAmburg, Forrest V. Morgeson III, et al. (2005). The American Customer Satisfaction Index at 10 Years. Ann Arbor, MI: Stephen M. Ross School of Business. Morgeson III, Forrest V. (2005). Reconciling Democracy and Bureaucracy: Towards a Deliberative-Democratic Theory of Bureaucratic Accountability. Ph.D. Dissertation. Pittsburgh, PA: University of Pittsburgh. II. Peer-Reviewed Journal Articles and Book Chapters Fornell, Claes, Forrest V. Morgeson III and Tomas Hult (2016). “Stock Returns on Customer Satisfaction Do Beat the Market: Gauging the Effect of a Marketing Intangible.” Journal of Marketing, 80(5), 92-107. Fornell, Claes, Forrest V. Morgeson III and Tomas Hult (2016). “An Abnormally Abnormal Intangible: Stock Returns on Customer Satisfaction.” Journal of Marketing, 80(5), 122- 125. Hult, G. Tomas M., Forrest V. Morgeson III, Neil A. Morgan, Sunil Mithas and Claes Fornell (2016). “Do Managers Know What Their Customers Think and Why?” Journal of the Academy of Marketing Science, 45(1), 37-54. Lariviere, Bart, Timothy L. Keiningham, Lerzan Aksoy, Atakan Yalcin, Forrest V. Morgeson III and Sunil Mithas, (2016). “Modeling Heterogeneity in The Satisfaction, Loyalty Intention and Shareholder Value Linkage: A Cross-Industry Analysis at the Customer and Firm Level.” Journal of Marketing Research, 53(1), 91-109. Morgeson III, Forrest V., Tomas Hult and Pratyush Nidhi Sharma (2015). “Cross-National Differences in Consumer Satisfaction: Mobile Services in Emerging and Developed Markets.” Journal of International Marketing, 23(2), 1-24. 12 Case 2:17-cv-02664-DSF-MRW Document 77-15 Filed 03/05/18 Page 4 of 16 Page ID #:1641 Keiningham, Timothy L., Forrest V. Morgeson III, Lerzan Aksoy and Luke Williams (2014). "Service Failure Severity, Customer Satisfaction, and Market Share: An Examination of the Airline Industry." Journal of Service Research, 17(4), 415-431. Morgeson III, Forrest V. (2013). “Expectations, Disconfirmation and Citizen Satisfaction with the U.S. Federal Government: Testing and Expanding the Model.“ Journal of Public Administration Research & Theory, 23(2), 289-305. Morgeson III, Forrest V., David VanAmburg and Sunil Mithas (2011). “Misplaced Trust? Exploring the Structure of the E-Government-Citizen Trust Relationship.” Journal of Public Administration Research & Theory, 21(2), 257-283. Morgeson III, Forrest V., Sunil Mithas, Timothy L. Keiningham and Lerzan Aksoy (2011). “An Investigation of the Cross-National Determinants of Customer Satisfaction.” Journal of the Academy of Marketing Science, 39(2), 198-215. Morgeson III, Forrest V. (2011). “Comparing Determinants of Website Satisfaction and Loyalty across the e-Government and e-Business Domains.” Electronic Government: An International Journal. 8(2/3), 164-184. Morgeson III, Forrest V. and Claudia Petrescu (2011). “Do They All Perform Alike? An Examination of Perceived Performance, Citizen Satisfaction and Trust with U.S. Federal Agencies.” International Review of Administrative Sciences, 77(3), 451-479. Morgeson III, Forrest V. (2011). “E-Government Performance Measurement: A Citizen-Centric Approach in Theory and Practice.” In E-Governance and Cross-boundary Collaboration: Innovations and Advancing Tools, Chen, Y.C. and P.Y. Chu (Eds.). Hershey, PA: IGI Global, 150- 165. Morgeson III, Forrest V. and Sunil Mithas (2009). “Does E-Government Measure up to E- Business? Comparing End-User Perceptions of U.S. Federal Government and E-Business Websites.” Public Administration Review, 69(4), 740-752. Fornell, Claes, Sunil Mithas and Forrest V. Morgeson III (2009). “The Statistical Significance of Portfolio Returns.” International Journal of Research in Marketing, 26(2), 162-163. Fornell, Claes, Sunil Mithas and Forrest V. Morgeson III (2009). “The Economic and Statistical Significance of Stock Returns on Customer Satisfaction.” Marketing Science, 28(5), 820-825. Barcellos, Paulo and Forrest V. Morgeson III (2009). “O Valor Financiero da Satisfação do Cliente: Reflexões em Nivel Macro e Microeconômico.” In Administracao Mercadologica: Teoria e Pesquisas – Volume 3. Universidade de Caxias do Sul: Brasil. 13 Case 2:17-cv-02664-DSF-MRW Document 77-15 Filed 03/05/18 Page 5 of 16 Page ID #:1642 Fornell, Claes, Sunil Mithas, Forrest V. Morgeson III and M.S. Krishnan (2006). “Customer Satisfaction and Stock Prices: High Returns, Low Risk.” Journal of Marketing, 70(1), 3-14. III. Work in Progress or Under Review, Conference Proceedings, and Book Reviews Morgeson III, Forrest V., Tomas Hult, and Timothy L. Keiningham (2017). “Customer Complaint, Firm Complaint Management, and Customer Loyalty: A Large Sample Intertemporal and Cross- Sectoral Examination.” [Work in Progress] Morgeson III, Forrest V. and Sunil Mithas (2017). Competing on Customer Satisfaction. [Book Manuscript] Morgeson III, Forrest V., Tomas Hult and Pratyush Nidhi Sharma (2017). “Customer Heterogeneity and Customer Satisfaction Modelling.” [Work in Progress] Morgeson III, Forrest V. and Pratyush Nidhi Sharma (2017). "In Which Model Do We Trust, and When? Comparing the Explanatory and Predictive Abilities of E-Government User Satisfaction and Citizen Trust Models." [Work in Progress] Morgeson III, Forrest V., David VanAmburg, and Barbara Bryant (2012). “Survey Interviewing with RDD/CATI vs. an Internet Panel/Online: A Comparison of Results from a Large, National, Multi-Sector Consumer Satisfaction Study.” [Work in Progress] Singh, A.J., Bonnie Knutson, and Forrest V. Morgeson III (2012). “Customer Satisfaction Trends in the U.S. Hotel Industry: Analysis of American Customer Satisfaction Index (ACSI) Data.“ [Work in Progress] Morgeson III, Forrest V. (2008). “Determinants of Website Satisfaction and Loyalty: Comparing E-Business and U.S. Federal E-Government Models.” In Proceedings of the 8th European Conference on e-Government, 403-414. [Conference Proceedings] Bryant, Barbara, Forrest V. Morgeson III and Reg Baker (2011). “Does Interview Mode Matter? Comparing Satisfaction Results across Internet and RDD Samples.“ 66th Annual American Association for Public Opinion Research Conference. [Conference Paper] Morgeson III, Forrest V. and Claudia Petrescu (2010). “Do They All Perform Alike? An Examination of Citizen Satisfaction, Trust and Confidence with U.S. Federal Agencies.” 68th Annual Meeting of the Midwest Political Science Association. [Conference Paper] Bryant, Barbara E., Forrest V. Morgeson III, Reginald Baker and David VanAmburg (2008). “Does Including Cell Phone Respondents in a RDD Sample Survey Affect the Dependent Variable? The Case of the American Customer Satisfaction Index.” Paper presented to the American Association of Public Opinion Research. [Conference Paper] 14 Case 2:17-cv-02664-DSF-MRW Document 77-15 Filed 03/05/18 Page 6 of 16 Page ID #:1643 Morgeson III, Forrest V. (2005). “The Centrality of Public Administration in the Normative Democratic Theory of Jürgen Habermas.” 63rd Annual Meeting of the Midwest Political Science Association. [Conference Paper] Morgeson III, Forrest V. (1999). “Review of Deliberative Democracy: Essays on Reason and Politics.” Constellations, 6(2), 253-257. [Book Review] IV. Peer Reviewer -Journal of the Academy of Marketing Science (Editorial Review Board) -Public Administration Review -Public Administration -Journal of Public Administration Research & Theory -International Review of Administrative Sciences -Local Government Studies -Public Performance and Management Review -Journal of International Marketing -Public Management Review -Journal of Business Research -Social Science Computer Review -The Services Industries Journal MEDIA INTERVIEWS AND PUBLICATIONS Thomas, Steff. “Federal agencies score all-time high on customer satisfaction survey,” Federalnewsradio.com. February 2, 2018. [Article and Radio Interview] Konkel, Frank. “Citizen Satisfaction with Government Reaches 11-Year High,” NextGov.com. February 1, 2018. Atiyeh, Clifford. “Can’t Get No—What? Appliances Are More Satisfying Than Cars?” Caranddriver.com. September 4, 2017. “Consumidor Hondureno No Es Leal a Los Marcos,” LaPrensa.hn. May 22, 2017. “UNITEC y AMCHAM lanzan importante estudio de satisfacción del consumidor,” blog.UNITEC.edu. May 22, 2017. Rogoway, Mike. “Comcast says customer service overhaul is showing results,” OregonLive.com. April 23, 2017. 15 Case 2:17-cv-02664-DSF-MRW Document 77-15 Filed 03/05/18 Page 7 of 16 Page ID #:1644 Weisbaum, Herb. “Stuck on Hold? The Worst Offenders Include Apple, Amazon, Airlines,” NBCNews.com. December 14, 2016. Ode, Kim. “Are Consumer Rating Surveys Driving You Nuts? You're Not Alone — Survey Fatigue is Scoring a 10,” StarTribune.com. October 29, 2016. Parker, Kristin. “Beat the Stock Market by Satisfying Customers,” MSUToday.edu. August 6, 2016. Farrell, Mike. “Cable Op Chafes at ACSI Placement,” MultiChannel.com. June 6, 2016. Baar, Aaron. “Telecom Customer Satisfaction Improving, Slightly,” MediaPost.com. June 1, 2016. Fernandez, Bob. “Comcast service ratings are better, but still low,” Philly.com. June 1, 2016. Kline, Daniel. “These Companies Have the Least Satisfied Customers in the United States,” Motley Fool. June 1, 2016. Peralta, Katherine. “Customer satisfaction improves for cable, internet providers,” Charlotte Observer. June 1, 2016. Gollayan, Christian. “The Three Worst Airlines in America,” NYPost.com. April 27, 2016. Silver, Kate. “We all love to complain about airlines, but customer satisfaction is at an all time-high,” WashingtonPost.com. April 26, 2016. Vasel, Kathryn. “America’s Most Hated Retailer Is...,” CNNMoney.com. February 24, 2016. Peralta, Katherine. “Here’s how Charlotte retailers rank in customer satisfaction,” The Charlotte Observer. February 23, 2016. Heckman, Jory. “Satisfaction with federal government services hits new low,” Federal News Radio. February 2, 2016. “The Think Tank with Garland Robinette,” WWL-AM 870, New Orleans, LA. January 28, 2016. [Radio Interview] “Survey Finds Americans Hate the Government,” KTRH-AM 740, Houston, TX. January 27, 2016. [Radio Interview] Hill, Catey. “Why Americans are fed up with the government,” MarketWatch.com. January 26, 2016. 16 Case 2:17-cv-02664-DSF-MRW Document 77-15 Filed 03/05/18 Page 8 of 16 Page ID #:1645 Picchi, Aimee. “Americans hate the U.S. government more than ever,” CBSNews.com. January 26, 2016. Klie, Leonard. “Slumping Customer Satisfaction Takes a Toll on the Economy,” CRM.com. December, 2015. “America's favorite fast food chain is Chick-fil-a while McDonald's is at the bottom of the heap in new survey,” DailyMail.com. July 5, 2015. Picchi, Aimee. “5 most loved and hated fast-food restaurants,” CBSNews.com. June 30, 2015. Vasel, Kathryn. “America's favorite fast food chain is...” CNNMoney.com. June 29, 2015. “Is Quality or Cost More Essential for Customer Satisfaction Globally?,” Michigan Business Network, Lansing, Michigan. June 10, 2015. [Radio Interview] Elliott, Christopher. “Customer satisfaction with airlines is actually at a 20-year high, survey finds,” Fortune.com. April 20, 2015. Segall, Eli. “Allegiant Air lags in passenger satisfaction survey,” Vegasinc.com. April 20, 2015. Lovitt, Rob. “Airline customer satisfaction gets a tiny bit better,” NBC.com. April 20, 2015. “Implications for Public Administrators Worldwide,” Michigan Business Network, Lansing, Michigan. February 26, 2015. [Radio Interview] “Global CSI and the Global Marketplace,” Michigan Business Network, Lansing, Michigan. February 18, 2015. [Radio Interview] Axelrad, Jacob. "With Internet outage, anger rises over proposed Time Warner-Comcast merger," Christian Science Monitor. August 27, 2014. Hill, Catey. "The most hated car company in America is," MarketWatch.com. August 27, 2014. [Newspaper and Television Interview]. Bennett, Jeff. "Automotive Customer Satisfaction Dips for Second Straight Year," Wall Street Journal. August 26, 2014. Lutz, Hannah. "Asian, European brands dominate satisfaction survey, but U.S. brands close gap," Automotive News. August 26, 2014. Horovitz, Bruce. "Not-So-Happy Meal: McDonald's Satisfaction Lags," USA Today. June 19, 2014. 17 Case 2:17-cv-02664-DSF-MRW Document 77-15 Filed 03/05/18 Page 9 of 16 Page ID #:1646 Morgeson III, Forrest V. and A.J. Singh. "Ritz-Carlton, JW Marriott tops in satisfaction," Hotel News Now. May 1, 2014. Garcia, Ben. "Service Hero Reaches Partnership with ACSI," Kuwait Times. February 18, 2014. Thibodeau, Patrick. "Benchmarking Healthcare.gov: A homepage in 3 seconds, but then a failure," Computerworld. November 5, 2013. Diaz, Alex. "For a more competitive Puerto Rico, create more satisfied customers," Caribbean Business (San Juan, Puerto Rico). September 19, 2013. Custodio, Marie. "Índice económico usa satisfacción del cliente," El Nuevo Dia (San Juan, Puerto Rico). September 11, 2013. Kantrow, Michelle. "Anderson Research Puerto Rico launches new index," Newsismybusiness.com (San Juan, Puerto Rico). September 9, 2013. Morphy, Erika. "Car Makers Face an Increasingly Bumpy Road," CRMBuyer.com. August 30, 2013. Azok, Dawn K. "Detroit automakers losing ground to foreign nameplates in new customer satisfaction survey," The Huntsville Times. August 27, 2013. Slack, Donovan. "Lawmakers push Obama administration on customer service," Gannett.com. August 7, 2013. Prezant, Jonathan. "Customer Satisfaction Shifts in Travel and Leisure Vertical," DMNews.com. June 20, 2013. Karp, Greg. "Study shows airlines don't rank high in customer satisfaction," Chicago Tribune. June 18, 2013. Donner, Francesca. "The Industries Americans Love to Hate," WSJ.com. June 18, 2013. Wharton, Stephanie. "US Payroll Tax Hike Could Hit Hotels," Hotel News Now. February 8, 2013. “Citizen Satisfaction with Federal Services,” Federal News Radio, 1500 AM. Washington, D.C. February 6, 2013. [Radio Interview] Morgeson III, Forrest V. and A.J. Singh. “Comparing Customer Satisfaction across Sectors,” Hotel News Now. October 5, 2012. Morgeson III, Forrest V. and A.J. Singh, “Hotel Customer Satisfaction Hits Record High,” Hotel News Now. July 9, 2012. 18 Case 2:17-cv-02664-DSF-MRW Document 77-15 Filed 03/05/18 Page 10 of 16 Page ID #:1647 Aho, Karen. “2012 Customer Service Hall of Shame.” MSN Money. July 9, 2012. Morgeson III, Forrest V. and A.J. Singh, “Hotel Guest Satisfaction Scores Raise Stakes,” Hotel News Now. March 21, 2012. Morphy, Erika, “Satisfaction Survey: Airlines, Fast-Food Joints Less Despised,” TechNewsWorld.com. June 21, 2012. Chacko, Sarah, “Survey: Satisfaction with Federal Services Climbs, Trust Sags,” Federal Times. January 19, 2012. Lee, Jolie, “Citizen Satisfaction with Federal Services Slightly up in 2011,” Federal News Radio, 1500 AM. Washington, D.C. January 19, 2012. [Article and Radio Interview] Keizer, Gregg, “Apple drubs rivals in satisfaction survey eighth year running,” ComputerWorld. September 20, 2011. Aaron Barr, “Customer Satisfaction with Computers is Unchanged,” Marketing Daily. September 20, 2011. David Perera, “Public satisfaction with federal websites outpaces satisfaction with services,” FierceGovernmentIT.com. January 26, 2011. Suzanne Kutoba, “Survey: Citizen Satisfaction Plunges,” Federal News Radio, 1500 AM. Washington, D.C. January 25, 2011. [Radio Interview] Nicole B. Johnson, “Citizens Less Satisfied with Government Services, Survey Finds,” Federal Times. January 25, 2011. Michael Finney, “The Michael Finney Show,” KGO Newstalk, 810 AM, San Francisco, CA. May 22, 2010. [Radio Interview] David Alire Garcia, “State follows trend to virtual government: E-government promises enhanced services often at a lower cost.” Michigan Messenger. January 29, 2010. Brandon Chew, “Be aware of CSI nuances: panel.” The Business Times (Singapore). July 31, 2009. “Customer Satisfaction adalah ‘Key Driver.’” Marketing (Jakarta, Indonesia). September, 2008. “Bisnis penyedia indeks konsumen tumbuh 30%.” Bisnis Indonesia (Jakarta, Indonesia). August 14, 2008. Mary Mosquera, “Customer satisfaction with e-gov falls.” FCW.com. December 20, 2007. 19 Case 2:17-cv-02664-DSF-MRW Document 77-15 Filed 03/05/18 Page 11 of 16 Page ID #:1648 “Indice de Satisfacción del Cliente se ha medido en Colombia.” Mercado de Dinero (Colombia, SA). August, 2007. Ignacio Gomez Escobar, “Clientes dicen estar satisfechos con vehículos y supermercados.” Dinero.com (Colombia, SA). August 23, 2007. David Ranii, “Satisfaction boosts revenue: Banks try to stand out from the pack by focusing on customer service.” The News & Observer (North Carolina). July 4, 2007. Michael Brush, “Happy customers, good stocks.” MSNMoney.com. May 30, 2007. Antonio Velarde, “Delta boosts Albert Ellis traffic.” TCMNet.com. May 22, 2007. “Lower Costs Drive Utility Customer Satisfaction Improvement.” Natural Gas Intelligence. May 21, 2007. “Gas Utilities Fare Better Than Power in Customer Satisfaction.” NGI's Daily Gas Price Index. May 17, 2007. Barbara Powell, “Toyota Leads in Buyer Satisfaction; Hyundai Advances.” Bloomberg.com. August 15, 2006. “Hyundai Motor gets most improved mark.” Joins.com. August 15, 2006. PUBLIC PRESENTATIONS “Using Customer Satisfaction and Brand Loyalty Big Data Metrics for Beating the Markets and Index Creation.” Presented at Quantitative Work Alliance for Applied Finance, Education and Wisdom (QWAFAFEW), New York, New York. November, 2017. “Customer Satisfaction.” Presented at the Lansing Regional HUG Event, Lansing, Michigan. November, 2017 [with Tomas Hult] “The American Customer Satisfaction Index: History, Lessons, and Benefits.” Presented at the Honduras CSI Launch Event, Tegucigalpa, Honduras. May, 2017. “Customer Satisfaction in the Telecommunications Industries.” Presented at the CIV Breakfast Forum, Bogota, Colombia. September, 2015. “The American Customer Satisfaction Index.” Presented to Hexagon, Inc., Delhi, India. August, 2015. [A five-day series of lectures on the ACSI] 20 Case 2:17-cv-02664-DSF-MRW Document 77-15 Filed 03/05/18 Page 12 of 16 Page ID #:1649 “An Overview of the American Customer Satisfaction Index.” Presented at the DNA- SACSI Launch Event. Jeddah, Saudi Arabia. March, 2015. “The American Customer Satisfaction Index.” Presented to Faktor Plus, Inc., Belgrade, Serbia. January, 2015. [A five-day series of lectures on the ACSI] "Customer Satisfaction Measurement for Process Improvement and Profitability." Presented at the BIBF Customer Satisfaction Workshop, Manama, Bahrain. April, 2014. "Citizen Satisfaction with the U.S. Federal Government: A Review of 2013 Results from ACSI." Presented at the 2014 Customer Satisfaction Forum, Federal Consulting Group, Washington, D.C. April, 2014. "American Customer Satisfaction Index: Satisfaction and Performance." Presented at the 2014 Service Hero Awards Ceremony, Kuwait City, Kuwait. February, 2014. “An Overview of the American Customer Satisfaction Index Project.” Presented to the Vietnam Productivity Center, Hanoi, Vietnam. December, 2013. "Citizen Satisfaction: Public Sector and Performance Measurement." Presented to the Chamber of Commerce of Puerto Rico, San Juan, Puerto Rico. September, 2013. "Customer Satisfaction: A Key Element for an Effective Business Strategy." Presented to the Asociación de Ejecutivos de Ventas y Mercadeo de PR (SME), San Juan, Puerto Rico. September, 2013. "The American Customer Satisfaction Index: An Overview." Presented to Korean Productivity Center, Seoul, South Korea. April, 2013. [A two-day series of lectures on the ACSI] “The American Customer Satisfaction Index.” Presented to Alfavia Inc., Lima, Peru. March, 2013. [A five-day series of lectures on the ACSI] "Citizen Satisfaction with the U.S. Federal Government: A Review of 2012 Results from ACSI." Presented at the 2013 Customer Satisfaction Forum, Federal Consulting Group, Washington, D.C. January, 2013. “The American Customer Satisfaction Index.” Presented to the Vietnam Productivity Center, Hanoi, Vietnam. January, 2013. [A four-day series of lectures on the ACSI] "The American Customer Satisfaction Index: Satisfaction and Performance." Presented at the 5th International Conference of the Bahrain Quality Society, Manama, Bahrain. December, 2012. [Keynote Speaker] 21 Case 2:17-cv-02664-DSF-MRW Document 77-15 Filed 03/05/18 Page 13 of 16 Page ID #:1650 "Customer Satisfaction: Private Sector, Public Sector, and Performance Management." Presented at the 5th International Conference of the Bahrain Quality Society, Manama, Bahrain. December, 2012. "Guest Satisfaction Trends in the US Lodging Industry: Key Insights from the American Customer Satisfaction Index (ACSI)." Presented at the International Hotel, Motel & Restaurant Show, N.Y., N.Y. November, 2012. “The American Customer Satisfaction Index: Satisfaction, Profitability, Competitiveness.” Presented at the Colegio de Estudios Superiores de Administración, Bogota, Colombia. May, 2012. “The American Customer Satisfaction Index: An Introduction.” Presented to the Malaysian Productivity Corporation, Kuala Lumpur, Malaysia. February, 2012. “Citizen Satisfaction with the U.S. Federal Government: A Review of 2011 Results from ACSI.” Presented at the 2012 Customer Satisfaction Forum, Federal Consulting Group, Washington, D.C. January, 2012. “Citizen Satisfaction with Government: ACSI Theory, Models and Methods.” Presented at the Universidad Iberoamericana, Mexico City, Mexico. November, 2011. “Low Risk/High Returns: Financial Returns on Customer Satisfaction.” Presented to the Alternative Investment Group, University of Michigan, Ann Arbor, MI. September, 2011. “Does Interview Mode Matter? Comparing Consumer Satisfaction Results across Internet and RDD Telephone Samples.” Presented at the 66th Annual American Association for Public Opinion Research Conference, Phoenix, AZ. May, 2011. “The American Customer Satisfaction Index: An Introduction.” Presented at Mars- Indonesia, Jakarta, Indonesia. May, 2011. “Satisfaction with U.S. Federal Government – 2010 Results from the American Customer Satisfaction Index.” Presented at the 2011 Customer Satisfaction Forum, Federal Consulting Group, Washington, D.C. January, 2011. th “Citizen Satisfaction Measurement in the United States.” Presented at the 19 Annual Quality Congress, Turkish Society for Quality, Istanbul, Turkey. November, 2010. “Cross-National Customer Satisfaction: Research and Findings from the ACSI.” Presented at the 19th Annual Quality Congress, Turkish Society for Quality, Istanbul, Turkey. November, 2010. 22 Case 2:17-cv-02664-DSF-MRW Document 77-15 Filed 03/05/18 Page 14 of 16 Page ID #:1651 “Performance Measurement and Citizen Satisfaction: Findings from the U.S. and Applications for Global E-Government.” Presented at Reinventing Government for a Return to Prosperity: North American Bridge to Romania and Eastern Europe, East Lansing, MI. May, 2010. “Panel: E-Government.” Chair and Discussant, at the Midwest Political Science Association Conference, Chicago, IL. April, 2010. “Do They All Perform Alike? A Cross-Agency Examination of Determinants of Citizen Satisfaction, Trust and Confidence with U.S. Federal Agencies.” Paper presented at the Midwest Political Science Association Conference, Chicago, IL. April, 2010. “Satisfaction with U.S. Federal Government – 2009 Results from ACSI.” Presented at the 2010 Customer Satisfaction Forum, Federal Consulting Group, Washington, D.C. January, 2010. “Overview of the American Customer Satisfaction Index.” Presented to the National Initiative for Service Excellence, Bridgetown, Barbados. November, 2009. “Panel discussion: Global customer satisfaction indices.” At the ISES Global Conference on Service Excellence, Singapore. July, 2009. “The American Customer Satisfaction Index: Results and Lessons Learned.” Presented at the ISES Global Conference on Service Excellence, Singapore. July, 2009. “The 2008 Contact Center Satisfaction Index.” Presented at the 2009 National Conference on Operations and Fulfillment, Las Vegas, Nevada. March, 2009. “Satisfaction with U.S. Federal Government – Results from ACSI.” Presented at the 2008 Customer Satisfaction Forum, Federal Consulting Group, Washington, D.C. December, 2008. “The American Customer Satisfaction Index – The Public Sector Model.” American Evaluation Association Annual Conference. Denver, Colorado. November, 2008. “Customer Satisfaction – Measurement and Managerial Applications: Lessons from the American Customer Satisfaction Index.” Presented at the seminar Customer Satisfaction Measurement. Jakarta, Indonesia. August, 2008. “Determinants of Website Satisfaction and Loyalty: Comparing E-Business and U.S. Federal E- Government Models.” 8th European Conference on e-Government, Lausanne, Switzerland. July, 2008. “Satisfaction with the U.S. Federal Government.” Presented to the Workforce Development Agency (WDA), Singapore. March, 2008. 23 Case 2:17-cv-02664-DSF-MRW Document 77-15 Filed 03/05/18 Page 15 of 16 Page ID #:1652 “The American Customer Satisfaction Index – A Roundtable Event.” Presented to the Institute for Service Excellence, Singapore Management University, Singapore. February, 2008. “Customer Satisfaction with U.S. Federal Government – Results of the ACSI.” Presented at the 2007 Customer Satisfaction Forum, Federal Consulting Group, Washington, D.C. December, 2007. “Citizen Satisfaction in the United States – Methods and Findings of the ACSI.” Presented at the 16th Annual Quality Congress, Turkish Society for Quality, Istanbul, Turkey. November, 2007. “The American Customer Satisfaction Index.” Presented at Tianjin University, Tianjin, China. September, 2007. [A four-day series of lectures on the ACSI to a group of faculty and Ph.D. students] “The American Customer Satisfaction Index.” Presented at the Customer Index Value launch in Bogota, Colombia. August, 2007. “Workshop: Identifying Key Elements in Measuring Government Satisfaction.” Presented at the Universidad Iberoamericana, Mexico City, Mexico. March, 2007. “Customer Satisfaction with the U.S. Federal Government – Methods and Findings of the ACSI.” Presented at the Universidad Iberoamericana, Mexico City, Mexico. March, 2007. “Findings of the 2006 American Customer Satisfaction Index.” Presented at the Interagency Customer Service Forum, Federal Consulting Group, Washington, D.C. December, 2006. “ACSI Overview: Methods, Modeling and Findings.” Presented at a Meeting of the Turkish Society for Quality, Istanbul, Turkey. April, 2006. “Findings of the 2005 American Customer Satisfaction Index.” Presented at the Interagency Customer Service Forum, Federal Consulting Group, Washington, D.C. December, 2005. “Citizen Satisfaction with the U.S. Federal Government.” Presented to the Office of Public Service Reform, Whitehall, London, U.K. June, 2005. “Key Findings for the 2003 American Customer Satisfaction Index.” Presented at the Interagency Customer Service Forum, Federal Consulting Group, Washington, D.C. December, 2003. 24 Case 2:17-cv-02664-DSF-MRW Document 77-15 Filed 03/05/18 Page 16 of 16 Page ID #:1653 EDUCATION Ph.D. Political Science, University of Pittsburgh, 2005 Major Fields: Political Theory, Public Administration Minor Fields: Comparative Politics, European Union Dissertation: Reconciling Democracy and Bureaucracy: Towards a Deliberative- Democratic Theory of Bureaucratic Accountability Dissertation Committee: Iris Young (University of Chicago), Frederick Whelan, B. Guy Peters, Michael Goodhart M.A. Political Science, University of Pittsburgh, 1999 “High Pass with Distinction” B.A. Western Michigan University, 1996 Major: Political Science Minor: Philosophy Magna cum Laude Other University of Michigan Inter-University Consortium on Political and Social Research (ICPSR, 2002) Summer Language Institute (German Language Study, 2000) 25 Case 2:17-cv-02664-DSF-MRW Document 77-16 Filed 03/05/18 Page 1 of 31 Page ID #:1654 EXHIBIT B Case 2:17-cv-02664-DSF-MRW Document 77-16 Filed 03/05/18 Page 2 of 31 Page ID #:1655 Expert Report of Forrest V. Morgeson III, Ph.D. Relating to Case No. 2:17-cv-02664-DSF-MRW Case 2:17-cv-02664-DSF-MRW Document 77-16 Filed 03/05/18 Page 3 of 31 Page ID #:1656 I. INTRODUCTION 1. I, Forrest V. Morgeson III, Ph.D., hereby submit this expert report regarding the complaint behavior of consumers in general and across diverse economic industries when experiencing product or service failures or other dissatisfying consumer experiences. Additional comments on consumer behavior relative to in-store purchasing, labeling information, package size and volume judgments are also included. II. PERSONAL BACKGROUND AND EXPERT QUALIFICATIONS 2. Forrest V. Morgeson III (Ph.D., University of Pittsburgh) is Director of Research at the American Customer Satisfaction Index (ACSI) in Ann Arbor, Michigan. As Director of Research, Dr. Morgeson is responsible for overseeing the data and analysis used to produce ACSI’s annual customer satisfaction study, which covers measurement and results for more than 350 companies in 45 economic industries derived from almost 200,000 annual consumer survey interviews. Dr. Morgeson also manages ACSI’s academic research, advanced statistical modeling and analysis, and the company’s international projects and licensing program (Global CSITM). Additionally, Dr. Morgeson holds the position of Instructor in the Department of Marketing at Michigan State University, teaching graduate-level and MBA courses on marketing, marketing research methods, and consumer behavior. 3. Dr. Morgeson’s research focuses on customer satisfaction generally, and specifically on citizen satisfaction with government services, cross-national marketing research, and the relationship between marketing variables and corporate financial performance. His research has been published in the leading journals in both administration and marketing, including: Public Administration Review; Journal of Public Administration Research & Theory; International 1 Case 2:17-cv-02664-DSF-MRW Document 77-16 Filed 03/05/18 Page 4 of 31 Page ID #:1657 Review of Administrative Sciences; Electronic Government; Journal of Marketing; Journal of Marketing Research; Marketing Science; Journal of Service Research; Journal of the Academy of Marketing Science; International Journal of Research in Marketing; and Journal of International Marketing. Dr. Morgeson's latest book, Citizen Satisfaction: Improving Government Performance, Efficiency, and Citizen Trust, was released in 2014. 4. In addition, over the past seventeen years Dr. Morgeson has consulted with dozens of corporations (both domestically and globally) and government agencies on consumer and citizen satisfaction issues, and has delivered lectures and presentations in dozens of countries around the world. III. SUMMARY OF OPINIONS 5. This report is based on my experience working with large annual samples of cross- industry consumer complaint and customer satisfaction data over the past two decades, my review of materials provided by counsel at Clarkson Law Firm, in Los Angeles, California, relevant scientific and academic literature, and recent empirical data measuring consumer complaint rates across U.S. economic industries and sectors. Based on these factors, it is my conclusion that: (1) across all economic sectors and industries, a relatively small percentage of dissatisfied consumers complain about their dissatisfying experience; (2) various factors, such as competition in an industry, the price paid for a good, switching costs, barriers to complaint, and perceived likelihood of and benefits to redress, are, both individually and collectively, strongly related to the likelihood dissatisfied consumers will complain, and that these factors vary across economic industries; and (3) consumers dissatisfied with Food Manufacturing (packaged and processed foods ready for consumption) have strong “disincentives” to complain that depress 2 Case 2:17-cv-02664-DSF-MRW Document 77-16 Filed 03/05/18 Page 5 of 31 Page ID #:1658 complaint rates among dissatisfied consumers, propositions that are supported by empirical data and can be extrapolated to Theater Box Candy. Additionally, I find that (4) consumers spend very little time making in-store purchase decisions, rarely read product labels, and use container or package size as a proxy for product volume and/or quantity (“volume judgment”). The bases and reasons supporting my opinions are provided in subsequent paragraphs. IV. BACKGROUND AND OPINIONS A. Across economic sectors and industries, a small percentage of dissatisfied consumers complain about their dissatisfying experience, possibly as few as one out of twenty. 6. Both the academic literature and empirical data agree that a relatively small percentage of dissatisfied consumers complain about their dissatisfying experience. Conservative estimates suggest that as many as two-thirds (66%) of dissatisfied consumers fail to complain about their experience, leaving only one-in-three (33%) as complainants to a company when unhappy (Chebat et al. 2005). Other research has indicated that only one dissatisfied customer in 20 – or only 5% of unhappy customers – formally complain (Downton 2002; TARP 1986). Why do even highly dissatisfied, unhappy customers tend to complain only rarely? The probability that a dissatisfied consumer will express their dissatisfaction via complaint is attributable to a variety of long-understood factors – identified in both the marketing and economics literatures – that drive the decision to simply “exit” a company for an alternative supplier without complaining (disloyalty/defection), exercise “voice” to a company (complain), or to simply ignore the dissatisfying experience and remain a loyal customer (Hirschman 1970). 3 Case 2:17-cv-02664-DSF-MRW Document 77-16 Filed 03/05/18 Page 6 of 31 Page ID #:1659 B. When comparing complaint likelihood and complaint rates across economic industries, several factors strongly influence a consumer’s decision to complain when dissatisfied. 7. Many factors influence the individual consumer’s decision about whether or not to complain to a company when dissatisfied, including demographic characteristics and psychological predisposition. Yet both the theoretical literature and empirical tests of these propositions have generally pointed to a handful of most important influencing factors that cause aggregate complaint rates (i.e. the percentage of customers that actually complain) to vary across economic industries. These include: the degree of competition in an industry; the price paid for a good or service; switching costs (or the costs associated with defecting from one supplier to a competitor); barriers or obstacles to complaining; and perceived likelihood (and benefit) of recovery or redress. 8. All else being equal, dissatisfied consumers are less likely to complain when an industry’s economic landscape is more competitive (i.e. includes more viable alternative suppliers/companies), as under these conditions defecting from one company to another is (relatively) easier, and unlike complaining, defecting itself doesn’t require an additional cost (eg. a time expenditure) from the consumer (Fornell & Davidow 1980; Hirschman 1970). Additionally, the price paid for a product or service about which the consumer is dissatisfied will often influence the decision to complain, as failures with higher-priced goods in which the consumer has invested a larger “share-of-wallet” create a stronger motivation in the consumer to seek redress and some form of recompense (Williams et al. 1993). 9. Moreover, higher switching costs, or difficulties a consumer might experience by moving from one supplier to another – such as a greater distance to retail outlets, fewer or less convenient automated teller machines (ATMs), learning a new computer or wireless phone 4 Case 2:17-cv-02664-DSF-MRW Document 77-16 Filed 03/05/18 Page 7 of 31 Page ID #:1660 operating system, the psychological comfort of a long-trusted brand, and so forth – will often make consumers more likely to complain rather than exit (Ayden et al. 2005; Lee et al. 2001). Similarly, if consumers perceive little or no opportunity to realistically achieve meaningful redress (i.e. some form of complaint recovery or compensation) from a company via the act of complaining, or if the time-cost of complaining outweighs the expected recovery, dissatisfied customers are less likely to complain (Fornell & Davidow 1980). And finally, significant barriers to complaint, such as limited information about how to complain (customer service/call center telephone numbers or company customer service websites) or who to complain to (the manufacturer of a product vs. the retail outlet selling the product), are often predictive of lower complaint rates (Fornell & Westbrook 1984). 10. In sum, the nature of an economic exchange and the context within which it takes place – and typically some combination of the factors discussed above – directly and strongly impact the likelihood that a consumer will complain to a company about their dissatisfying experience. C. Based on the above factors, companies producing packaged and processed foods ready for consumption (Food Manufacturing) are predicted to have low complaint rates regardless of levels of consumer dissatisfaction, and recent empirical data confirms this prediction. These findings extrapolate and apply to companies marketing confectionary goods (such as Theater Box Candy). 11. Based on the above propositions, certain consumer industries are predicted to have relatively low complaint rates among dissatisfied consumers, both low in an absolute sense and relative to other economic industries. One such industry is Food Manufacturing (North American Industrial Classification System (NAICS) code 311), which includes all of the different types of processed and packaged foods produced in the U.S. (including “Sugar and Confectionery 5 Case 2:17-cv-02664-DSF-MRW Document 77-16 Filed 03/05/18 Page 8 of 31 Page ID #:1661 Product Manufacturing,” i.e. all types of candies).1 Regarding competition, as of 2012 the Food Manufacturing industry was reported by the U.S. Census Bureau (www.census.gov) to have an Herfindahl-Hirschman index (HHI) score of industry concentration of only 97.0, a very low score indicative of a highly competitive market. This suggests that defection is nearly “frictionless” and a viable option for consumers dissatisfied with their experiences, minimizing complaint likelihood.2 The industry also tends towards a relatively low price-point for the individual goods sold, which also depresses complaint likelihood and aggregate complaint rates.3 Furthermore, while brand loyalty may play a role in increasing switching costs to some degree, given the number of alternative suppliers and the “ease of use” of products in this industry (eg. it does not require a significant time-cost to “learn to eat” a new cold cereal, or to “learn to open” a new lunch meat or candy package), high switching costs do not dissuade customers from defecting to a competitor, and this in turn decreases the likelihood of complaint. 12. Additionally, because in almost all cases the food products in this category are sold in retail outlets not directly affiliated with the actual manufacturer of the product (store-branded products being the exception), at least some barriers to complaining exist (to whom should the 1For more information on the NAICS, see: www.bls.gov. 2The Herfindahl-Hirschman index (HHI) is a commonly used measure of market concentration or industry competitiveness. It is calculated by squaring the market share of each firm competing in an economic industry (typically the largest 50 companies), and then summing the resulting numbers. The HHI can range from close to zero to 10,000 (with 10,000 representing a pure monopoly). The U.S. Department of Justice considers a market with an HHI of less than 1,500 to be a competitive marketplace, an HHI of 1,500 to 2,500 to be a moderately concentrated marketplace, and an HHI of 2,500 or greater to be a highly concentrated marketplace (https://www.justice.gov/atr/herfindahl-hirschman-index). 3While prices vary across sub-categories of manufactured food consumer goods (cold cereal vs. processed lunch meats vs. confections), in 2015 the average American household spent only about $4000 per year, or roughly $83 per week, for all items purchased at a grocery store, according to the U.S. Bureau of Labor Statistics (www.bls.gov). 6 Case 2:17-cv-02664-DSF-MRW Document 77-16 Filed 03/05/18 Page 9 of 31 Page ID #:1662 customer complain, the manufacturer or the retailer?), and this too is predicted to result in lower complaint rates. Finally, because of the aforementioned low price-point for the typical good purchased in this category, while consumers might anticipate a benefit in terms of redress from the act of complaining when dissatisfied, that benefit is likely perceived to be limited to the price paid for the good itself, and since that price is relatively low, it diminishes the perceived benefit relative to the cost of complaining. 13. These propositions regarding low complaint rates in the Food Manufacturing industry are substantiated by empirical data. Exhibit 3 provides complaint rates across 47 different consumer industries as measured by the annual American Customer Satisfaction Index (www.theacsi.org) study of consumers (through the end of 2017). According to these results, Food Manufacturing has the 4th lowest complaint rate of the 47 measured industries, with complaints registered by just 3% of consumer respondents. Two of the industries with lower complaint rates – e-business News and Information (online newspaper content) and Social Media (i.e. Facebook, Twitter, LinkedIn) websites – are in reasonably competitive industries, provide completely free services, have moderate to low switching costs, moderate barriers to complaint, and limited (or no) compensation for redress to those who do complain. The other industry with a lower complaint rate – Personal Care and Cleaning Products – is another manufacturing industry nearly identical along all dimensions (competitiveness, price, switching costs, etc.) to Food Manufacturing. 14. On the other hand, the industry with the highest complaint rate – Subscription TV (Cable and Satellite) at 37% – is marked by: very limited competition, with government- regulated near-monopoly power for cable companies in most communities; a relatively high price-point that has increased far faster than inflation over the last decade (Associated Press 7 Case 2:17-cv-02664-DSF-MRW Document 77-16 Filed 03/05/18 Page 10 of 31 Page ID #:1663 2018); in many cases, significant switching costs (eg. learning a new service platform and remote control, for example, at least if switching from cable to satellite or vice versa); very limited barriers to complaint; and, in some cases, opportunities to receive significant discounts via the act of complaining. 15. Extrapolating from these findings to Theater Box Candy, we can conclude that this industry within Food Manufacturing does not have complaint rates commensurate with actual consumer dissatisfaction. The sub-sector within Food Manufacturing of greatest concern in this context – Sugar and Confectionary Product Manufacturing – is marked by: an HHI slightly higher than the overall sector of 446.0, but a score still indicative of a highly competitive market; relatively low prices, likely lower than the overall category average; very low switching costs, other than (possibly) brand loyalty; moderate to high barriers to complaint; and potential recompense via complaint perceived as limited to the low price paid for the products. 16. In conclusion, as predicted by well-tested theoretical propositions concerning the economic conditions under which dissatisfied consumers will use their “voice” or complain, rather than simply defecting or remaining loyal, complaint rates for the Food Manufacturing industry are very low relative to other economic industries, and therefore unlikely to accurately reflect consumer dissatisfaction with their experiences. These findings extrapolate to the current context, and include Theater Box Candy. V. ADDITIONAL OPINIONS D. Consumers spend very little time making in-store purchase decisions, rarely read product labels, use container or package size as a proxy for product volume and/or quantity (“volume judgment”), and expect package size to reflect package quantity. 17. Due to time constraints, cognitive limitations, quantity and diversity of alternatives, and other related factors, consumer researchers have long recognized that consumers spend 8 Case 2:17-cv-02664-DSF-MRW Document 77-16 Filed 03/05/18 Page 11 of 31 Page ID #:1664 relatively little time making in-store purchase decisions. In one observational study in a supermarket environment, consumers were found to spend on average only 12 seconds between arrival and departure (with the item chosen in between) at each individual product display in the store; 42% of respondents arrived and departed with a product in only five seconds or less (Dickson & Sawyer 1990). Due to the speed with which purchase decisions are made, the same study found that few consumers were able to identify basic features of the product just selected. Fewer than half of consumers (47%) could even indicate the price of the good placed in their basket immediately after placing it there (Dickson & Sawyer 1990). Unsurprisingly, therefore, researchers have also found that few consumers read package labeling information, regarding volume or quantity, nutritional information, sales or discounted pricing, or any other information (Balasubramanian and Cole 2002; Cole and Balasubramanian 1993; Dickson & Sawyer 1990; Folkes and Matta 2004). 18. Given the speed with which consumers make decisions and the limited desire (or inability) to read labeling information prior to making decisions, studies have found that consumers make decisions about product size or quantity (“volume judgments”) based on package features (Folkes and Matta 2004; Raghubir and Krishna 1999). Specifically, consumers have consistently been found to rely on the dominant human sense (vision) and “visual heuristics” to estimate the expected volume of a product (a process that, to complete accurately, would require measurement instruments and geometry), and more particularly to assume that a product will have a larger volume if a package is taller (height) and/or elongated (Folkes and Matta 2004; Raghubir and Krishna 1999). Moreover, consumers expect package size to accurately represent the quantity of the good being purchased. In a recent study highly applicable to the current context – focused on similar consumer goods (chocolate confections) in a similar 9 Case 2:17-cv-02664-DSF-MRW Document 77-16 Filed 03/05/18 Page 12 of 31 Page ID #:1665 market (the United Kingdom) - researchers found that "slack fill" was generally not something consumers knew about prior to experiencing it (Wilkins et al. 2016). After experiencing a package size misrepresentative of the quantity of the product included, the same research found that consumers experienced significant "cognitive dissonance" resulting in elevated dissatisfaction (Wilkins et al. 2016). VI. COMPENSATION 19. My compensation is $3 7 5 per hour and is not premised or conditioned on any outcome in this case. VII. SUPPLEMENTATION AND REBUTTAL 20. I may also testify in rebuttal to testimony or opinions offered by other witnesses. I reserve the right to supplement or amend this report in light of any additional information or documents, in response to any critique of my report or alternative opinions advanced by or on behalf of Plaintiffs. At trial, I may also use a tutorial, graphics, and/or other demonstrative exhibits to help explain my opinions and/or testimony. ~i/ / fl . Forrest V. Morgeson III, Ph.D. Date 10 Case 2:17-cv-02664-DSF-MRW Document 77-16 Filed 03/05/18 Page 13 of 31 Page ID #:1666 EXHIBIT 1 Forrest V. Morgeson III, Ph.D. Director of Research and Global CSI Manager, American Customer Satisfaction Index LLC Instructor, Department of Marketing, Michigan State University Phone: +1.734.649.6818; Email: [email protected] PROFESSIONAL EXPERIENCE American Customer Satisfaction Index, LLC 2009-Present: Director of Research and Global CSI Manager •Director of Research: Responsible for managing all academic research and advanced statistical analysis for the American Customer Satisfaction Index •Global CSI Manager: Responsible for recruiting, managing, and training ACSI international partner organizations through ACSI's Global CSITM program. Country-groups managed and trained include Barbados, China, Colombia, Dominican Republic, Honduras, India, Indonesia, Kuwait, Malaysia, Mexico, Peru, Puerto Rico, Saudi Arabia, Serbia, Singapore, South Africa, South Korea, Turkey, Vietnam, and the United Kingdom. •Customer Satisfaction Project Management: Responsible for managing domestic and international custom research projects for ACSI, including questionnaire design, data collection, specialized complex model building and statistical analysis, report production, and the presentation of deliverables Michigan State University, Department of Marketing 2016-Present: Instructor in the “Master of Science in Marketing Research Program” •Aggregate student evaluation “Instructor Quality Rating” of 4.5 (out of 5.0) Eastern Michigan University, Department of Political Science 2002-2013: Adjunct Professor of Political Science University of Michigan, Stephen M. Ross School of Business 2002-2009: Research Scientist & Lead Statistician, National Quality Research Center CFI Group International 2008-2009: Project Manager and Consultant •Worked on-site and managed multiple stages of a cross-national CSI tracking study for a large, multi-national African telecommunications company 11 Case 2:17-cv-02664-DSF-MRW Document 77-16 Filed 03/05/18 Page 14 of 31 Page ID #:1667 PUBLICATIONS & SCHOLARLY ACTIVITIES I. Books and Book-Length Manuscripts Morgeson III, Forrest V. (2014). Citizen Satisfaction: Improving Government Performance, Efficiency, and Citizen Trust. N.Y., N.Y.: Palgrave MacMillan. Bryant, Barbara, Claes Fornell and Forrest V. Morgeson III (2008). American Customer Satisfaction Index Methodology Report. Milwaukee, WI: American Society for Quality. Fornell, Claes (2007). The Satisfied Customer: Winners and Losers in the Battle for Buyer Preference. N.Y., N.Y.: Palgrave Macmillan. (Editorial assistance) Morgeson III, Forrest V. (2007). ACSI Modeling Manual: Processes and Methods for Creating ACSI Models. Ann Arbor, MI: National Quality Research Center. Fornell, Claes, David VanAmburg, Forrest V. Morgeson III, et al. (2005). The American Customer Satisfaction Index at 10 Years. Ann Arbor, MI: Stephen M. Ross School of Business. Morgeson III, Forrest V. (2005). Reconciling Democracy and Bureaucracy: Towards a Deliberative-Democratic Theory of Bureaucratic Accountability. Ph.D. Dissertation. Pittsburgh, PA: University of Pittsburgh. II. Peer-Reviewed Journal Articles and Book Chapters Fornell, Claes, Forrest V. Morgeson III and Tomas Hult (2016). “Stock Returns on Customer Satisfaction Do Beat the Market: Gauging the Effect of a Marketing Intangible.” Journal of Marketing, 80(5), 92-107. Fornell, Claes, Forrest V. Morgeson III and Tomas Hult (2016). “An Abnormally Abnormal Intangible: Stock Returns on Customer Satisfaction.” Journal of Marketing, 80(5), 122- 125. Hult, G. Tomas M., Forrest V. Morgeson III, Neil A. Morgan, Sunil Mithas and Claes Fornell (2016). “Do Managers Know What Their Customers Think and Why?” Journal of the Academy of Marketing Science, 45(1), 37-54. Lariviere, Bart, Timothy L. Keiningham, Lerzan Aksoy, Atakan Yalcin, Forrest V. Morgeson III and Sunil Mithas, (2016). “Modeling Heterogeneity in The Satisfaction, Loyalty Intention and Shareholder Value Linkage: A Cross-Industry Analysis at the Customer and Firm Level.” Journal of Marketing Research, 53(1), 91-109. Morgeson III, Forrest V., Tomas Hult and Pratyush Nidhi Sharma (2015). “Cross-National Differences in Consumer Satisfaction: Mobile Services in Emerging and Developed Markets.” Journal of International Marketing, 23(2), 1-24. 12 Case 2:17-cv-02664-DSF-MRW Document 77-16 Filed 03/05/18 Page 15 of 31 Page ID #:1668 Keiningham, Timothy L., Forrest V. Morgeson III, Lerzan Aksoy and Luke Williams (2014). "Service Failure Severity, Customer Satisfaction, and Market Share: An Examination of the Airline Industry." Journal of Service Research, 17(4), 415-431. Morgeson III, Forrest V. (2013). “Expectations, Disconfirmation and Citizen Satisfaction with the U.S. Federal Government: Testing and Expanding the Model.“ Journal of Public Administration Research & Theory, 23(2), 289-305. Morgeson III, Forrest V., David VanAmburg and Sunil Mithas (2011). “Misplaced Trust? Exploring the Structure of the E-Government-Citizen Trust Relationship.” Journal of Public Administration Research & Theory, 21(2), 257-283. Morgeson III, Forrest V., Sunil Mithas, Timothy L. Keiningham and Lerzan Aksoy (2011). “An Investigation of the Cross-National Determinants of Customer Satisfaction.” Journal of the Academy of Marketing Science, 39(2), 198-215. Morgeson III, Forrest V. (2011). “Comparing Determinants of Website Satisfaction and Loyalty across the e-Government and e-Business Domains.” Electronic Government: An International Journal. 8(2/3), 164-184. Morgeson III, Forrest V. and Claudia Petrescu (2011). “Do They All Perform Alike? An Examination of Perceived Performance, Citizen Satisfaction and Trust with U.S. Federal Agencies.” International Review of Administrative Sciences, 77(3), 451-479. Morgeson III, Forrest V. (2011). “E-Government Performance Measurement: A Citizen-Centric Approach in Theory and Practice.” In E-Governance and Cross-boundary Collaboration: Innovations and Advancing Tools, Chen, Y.C. and P.Y. Chu (Eds.). Hershey, PA: IGI Global, 150- 165. Morgeson III, Forrest V. and Sunil Mithas (2009). “Does E-Government Measure up to E- Business? Comparing End-User Perceptions of U.S. Federal Government and E-Business Websites.” Public Administration Review, 69(4), 740-752. Fornell, Claes, Sunil Mithas and Forrest V. Morgeson III (2009). “The Statistical Significance of Portfolio Returns.” International Journal of Research in Marketing, 26(2), 162-163. Fornell, Claes, Sunil Mithas and Forrest V. Morgeson III (2009). “The Economic and Statistical Significance of Stock Returns on Customer Satisfaction.” Marketing Science, 28(5), 820-825. Barcellos, Paulo and Forrest V. Morgeson III (2009). “O Valor Financiero da Satisfação do Cliente: Reflexões em Nivel Macro e Microeconômico.” In Administracao Mercadologica: Teoria e Pesquisas – Volume 3. Universidade de Caxias do Sul: Brasil. 13 Case 2:17-cv-02664-DSF-MRW Document 77-16 Filed 03/05/18 Page 16 of 31 Page ID #:1669 Fornell, Claes, Sunil Mithas, Forrest V. Morgeson III and M.S. Krishnan (2006). “Customer Satisfaction and Stock Prices: High Returns, Low Risk.” Journal of Marketing, 70(1), 3-14. III. Work in Progress or Under Review, Conference Proceedings, and Book Reviews Morgeson III, Forrest V., Tomas Hult, and Timothy L. Keiningham (2017). “Customer Complaint, Firm Complaint Management, and Customer Loyalty: A Large Sample Intertemporal and Cross- Sectoral Examination.” [Work in Progress] Morgeson III, Forrest V. and Sunil Mithas (2017). Competing on Customer Satisfaction. [Book Manuscript] Morgeson III, Forrest V., Tomas Hult and Pratyush Nidhi Sharma (2017). “Customer Heterogeneity and Customer Satisfaction Modelling.” [Work in Progress] Morgeson III, Forrest V. and Pratyush Nidhi Sharma (2017). "In Which Model Do We Trust, and When? Comparing the Explanatory and Predictive Abilities of E-Government User Satisfaction and Citizen Trust Models." [Work in Progress] Morgeson III, Forrest V., David VanAmburg, and Barbara Bryant (2012). “Survey Interviewing with RDD/CATI vs. an Internet Panel/Online: A Comparison of Results from a Large, National, Multi-Sector Consumer Satisfaction Study.” [Work in Progress] Singh, A.J., Bonnie Knutson, and Forrest V. Morgeson III (2012). “Customer Satisfaction Trends in the U.S. Hotel Industry: Analysis of American Customer Satisfaction Index (ACSI) Data.“ [Work in Progress] Morgeson III, Forrest V. (2008). “Determinants of Website Satisfaction and Loyalty: Comparing E-Business and U.S. Federal E-Government Models.” In Proceedings of the 8th European Conference on e-Government, 403-414. [Conference Proceedings] Bryant, Barbara, Forrest V. Morgeson III and Reg Baker (2011). “Does Interview Mode Matter? Comparing Satisfaction Results across Internet and RDD Samples.“ 66th Annual American Association for Public Opinion Research Conference. [Conference Paper] Morgeson III, Forrest V. and Claudia Petrescu (2010). “Do They All Perform Alike? An Examination of Citizen Satisfaction, Trust and Confidence with U.S. Federal Agencies.” 68th Annual Meeting of the Midwest Political Science Association. [Conference Paper] Bryant, Barbara E., Forrest V. Morgeson III, Reginald Baker and David VanAmburg (2008). “Does Including Cell Phone Respondents in a RDD Sample Survey Affect the Dependent Variable? The Case of the American Customer Satisfaction Index.” Paper presented to the American Association of Public Opinion Research. [Conference Paper] 14 Case 2:17-cv-02664-DSF-MRW Document 77-16 Filed 03/05/18 Page 17 of 31 Page ID #:1670 Morgeson III, Forrest V. (2005). “The Centrality of Public Administration in the Normative Democratic Theory of Jürgen Habermas.” 63rd Annual Meeting of the Midwest Political Science Association. [Conference Paper] Morgeson III, Forrest V. (1999). “Review of Deliberative Democracy: Essays on Reason and Politics.” Constellations, 6(2), 253-257. [Book Review] IV. Peer Reviewer -Journal of the Academy of Marketing Science (Editorial Review Board) -Public Administration Review -Public Administration -Journal of Public Administration Research & Theory -International Review of Administrative Sciences -Local Government Studies -Public Performance and Management Review -Journal of International Marketing -Public Management Review -Journal of Business Research -Social Science Computer Review -The Services Industries Journal MEDIA INTERVIEWS AND PUBLICATIONS Thomas, Steff. “Federal agencies score all-time high on customer satisfaction survey,” Federalnewsradio.com. February 2, 2018. [Article and Radio Interview] Konkel, Frank. “Citizen Satisfaction with Government Reaches 11-Year High,” NextGov.com. February 1, 2018. Atiyeh, Clifford. “Can’t Get No—What? Appliances Are More Satisfying Than Cars?” Caranddriver.com. September 4, 2017. “Consumidor Hondureno No Es Leal a Los Marcos,” LaPrensa.hn. May 22, 2017. “UNITEC y AMCHAM lanzan importante estudio de satisfacción del consumidor,” blog.UNITEC.edu. May 22, 2017. Rogoway, Mike. “Comcast says customer service overhaul is showing results,” OregonLive.com. April 23, 2017. 15 Case 2:17-cv-02664-DSF-MRW Document 77-16 Filed 03/05/18 Page 18 of 31 Page ID #:1671 Weisbaum, Herb. “Stuck on Hold? The Worst Offenders Include Apple, Amazon, Airlines,” NBCNews.com. December 14, 2016. Ode, Kim. “Are Consumer Rating Surveys Driving You Nuts? You're Not Alone — Survey Fatigue is Scoring a 10,” StarTribune.com. October 29, 2016. Parker, Kristin. “Beat the Stock Market by Satisfying Customers,” MSUToday.edu. August 6, 2016. Farrell, Mike. “Cable Op Chafes at ACSI Placement,” MultiChannel.com. June 6, 2016. Baar, Aaron. “Telecom Customer Satisfaction Improving, Slightly,” MediaPost.com. June 1, 2016. Fernandez, Bob. “Comcast service ratings are better, but still low,” Philly.com. June 1, 2016. Kline, Daniel. “These Companies Have the Least Satisfied Customers in the United States,” Motley Fool. June 1, 2016. Peralta, Katherine. “Customer satisfaction improves for cable, internet providers,” Charlotte Observer. June 1, 2016. Gollayan, Christian. “The Three Worst Airlines in America,” NYPost.com. April 27, 2016. Silver, Kate. “We all love to complain about airlines, but customer satisfaction is at an all time-high,” WashingtonPost.com. April 26, 2016. Vasel, Kathryn. “America’s Most Hated Retailer Is...,” CNNMoney.com. February 24, 2016. Peralta, Katherine. “Here’s how Charlotte retailers rank in customer satisfaction,” The Charlotte Observer. February 23, 2016. Heckman, Jory. “Satisfaction with federal government services hits new low,” Federal News Radio. February 2, 2016. “The Think Tank with Garland Robinette,” WWL-AM 870, New Orleans, LA. January 28, 2016. [Radio Interview] “Survey Finds Americans Hate the Government,” KTRH-AM 740, Houston, TX. January 27, 2016. [Radio Interview] Hill, Catey. “Why Americans are fed up with the government,” MarketWatch.com. January 26, 2016. 16 Case 2:17-cv-02664-DSF-MRW Document 77-16 Filed 03/05/18 Page 19 of 31 Page ID #:1672 Picchi, Aimee. “Americans hate the U.S. government more than ever,” CBSNews.com. January 26, 2016. Klie, Leonard. “Slumping Customer Satisfaction Takes a Toll on the Economy,” CRM.com. December, 2015. “America's favorite fast food chain is Chick-fil-a while McDonald's is at the bottom of the heap in new survey,” DailyMail.com. July 5, 2015. Picchi, Aimee. “5 most loved and hated fast-food restaurants,” CBSNews.com. June 30, 2015. Vasel, Kathryn. “America's favorite fast food chain is...” CNNMoney.com. June 29, 2015. “Is Quality or Cost More Essential for Customer Satisfaction Globally?,” Michigan Business Network, Lansing, Michigan. June 10, 2015. [Radio Interview] Elliott, Christopher. “Customer satisfaction with airlines is actually at a 20-year high, survey finds,” Fortune.com. April 20, 2015. Segall, Eli. “Allegiant Air lags in passenger satisfaction survey,” Vegasinc.com. April 20, 2015. Lovitt, Rob. “Airline customer satisfaction gets a tiny bit better,” NBC.com. April 20, 2015. “Implications for Public Administrators Worldwide,” Michigan Business Network, Lansing, Michigan. February 26, 2015. [Radio Interview] “Global CSI and the Global Marketplace,” Michigan Business Network, Lansing, Michigan. February 18, 2015. [Radio Interview] Axelrad, Jacob. "With Internet outage, anger rises over proposed Time Warner-Comcast merger," Christian Science Monitor. August 27, 2014. Hill, Catey. "The most hated car company in America is," MarketWatch.com. August 27, 2014. [Newspaper and Television Interview]. Bennett, Jeff. "Automotive Customer Satisfaction Dips for Second Straight Year," Wall Street Journal. August 26, 2014. Lutz, Hannah. "Asian, European brands dominate satisfaction survey, but U.S. brands close gap," Automotive News. August 26, 2014. Horovitz, Bruce. "Not-So-Happy Meal: McDonald's Satisfaction Lags," USA Today. June 19, 2014. 17 Case 2:17-cv-02664-DSF-MRW Document 77-16 Filed 03/05/18 Page 20 of 31 Page ID #:1673 Morgeson III, Forrest V. and A.J. Singh. "Ritz-Carlton, JW Marriott tops in satisfaction," Hotel News Now. May 1, 2014. Garcia, Ben. "Service Hero Reaches Partnership with ACSI," Kuwait Times. February 18, 2014. Thibodeau, Patrick. "Benchmarking Healthcare.gov: A homepage in 3 seconds, but then a failure," Computerworld. November 5, 2013. Diaz, Alex. "For a more competitive Puerto Rico, create more satisfied customers," Caribbean Business (San Juan, Puerto Rico). September 19, 2013. Custodio, Marie. "Índice económico usa satisfacción del cliente," El Nuevo Dia (San Juan, Puerto Rico). September 11, 2013. Kantrow, Michelle. "Anderson Research Puerto Rico launches new index," Newsismybusiness.com (San Juan, Puerto Rico). September 9, 2013. Morphy, Erika. "Car Makers Face an Increasingly Bumpy Road," CRMBuyer.com. August 30, 2013. Azok, Dawn K. "Detroit automakers losing ground to foreign nameplates in new customer satisfaction survey," The Huntsville Times. August 27, 2013. Slack, Donovan. "Lawmakers push Obama administration on customer service," Gannett.com. August 7, 2013. Prezant, Jonathan. "Customer Satisfaction Shifts in Travel and Leisure Vertical," DMNews.com. June 20, 2013. Karp, Greg. "Study shows airlines don't rank high in customer satisfaction," Chicago Tribune. June 18, 2013. Donner, Francesca. "The Industries Americans Love to Hate," WSJ.com. June 18, 2013. Wharton, Stephanie. "US Payroll Tax Hike Could Hit Hotels," Hotel News Now. February 8, 2013. “Citizen Satisfaction with Federal Services,” Federal News Radio, 1500 AM. Washington, D.C. February 6, 2013. [Radio Interview] Morgeson III, Forrest V. and A.J. Singh. “Comparing Customer Satisfaction across Sectors,” Hotel News Now. October 5, 2012. Morgeson III, Forrest V. and A.J. Singh, “Hotel Customer Satisfaction Hits Record High,” Hotel News Now. July 9, 2012. 18 Case 2:17-cv-02664-DSF-MRW Document 77-16 Filed 03/05/18 Page 21 of 31 Page ID #:1674 Aho, Karen. “2012 Customer Service Hall of Shame.” MSN Money. July 9, 2012. Morgeson III, Forrest V. and A.J. Singh, “Hotel Guest Satisfaction Scores Raise Stakes,” Hotel News Now. March 21, 2012. Morphy, Erika, “Satisfaction Survey: Airlines, Fast-Food Joints Less Despised,” TechNewsWorld.com. June 21, 2012. Chacko, Sarah, “Survey: Satisfaction with Federal Services Climbs, Trust Sags,” Federal Times. January 19, 2012. Lee, Jolie, “Citizen Satisfaction with Federal Services Slightly up in 2011,” Federal News Radio, 1500 AM. Washington, D.C. January 19, 2012. [Article and Radio Interview] Keizer, Gregg, “Apple drubs rivals in satisfaction survey eighth year running,” ComputerWorld. September 20, 2011. Aaron Barr, “Customer Satisfaction with Computers is Unchanged,” Marketing Daily. September 20, 2011. David Perera, “Public satisfaction with federal websites outpaces satisfaction with services,” FierceGovernmentIT.com. January 26, 2011. Suzanne Kutoba, “Survey: Citizen Satisfaction Plunges,” Federal News Radio, 1500 AM. Washington, D.C. January 25, 2011. [Radio Interview] Nicole B. Johnson, “Citizens Less Satisfied with Government Services, Survey Finds,” Federal Times. January 25, 2011. Michael Finney, “The Michael Finney Show,” KGO Newstalk, 810 AM, San Francisco, CA. May 22, 2010. [Radio Interview] David Alire Garcia, “State follows trend to virtual government: E-government promises enhanced services often at a lower cost.” Michigan Messenger. January 29, 2010. Brandon Chew, “Be aware of CSI nuances: panel.” The Business Times (Singapore). July 31, 2009. “Customer Satisfaction adalah ‘Key Driver.’” Marketing (Jakarta, Indonesia). September, 2008. “Bisnis penyedia indeks konsumen tumbuh 30%.” Bisnis Indonesia (Jakarta, Indonesia). August 14, 2008. Mary Mosquera, “Customer satisfaction with e-gov falls.” FCW.com. December 20, 2007. 19 Case 2:17-cv-02664-DSF-MRW Document 77-16 Filed 03/05/18 Page 22 of 31 Page ID #:1675 “Indice de Satisfacción del Cliente se ha medido en Colombia.” Mercado de Dinero (Colombia, SA). August, 2007. Ignacio Gomez Escobar, “Clientes dicen estar satisfechos con vehículos y supermercados.” Dinero.com (Colombia, SA). August 23, 2007. David Ranii, “Satisfaction boosts revenue: Banks try to stand out from the pack by focusing on customer service.” The News & Observer (North Carolina). July 4, 2007. Michael Brush, “Happy customers, good stocks.” MSNMoney.com. May 30, 2007. Antonio Velarde, “Delta boosts Albert Ellis traffic.” TCMNet.com. May 22, 2007. “Lower Costs Drive Utility Customer Satisfaction Improvement.” Natural Gas Intelligence. May 21, 2007. “Gas Utilities Fare Better Than Power in Customer Satisfaction.” NGI's Daily Gas Price Index. May 17, 2007. Barbara Powell, “Toyota Leads in Buyer Satisfaction; Hyundai Advances.” Bloomberg.com. August 15, 2006. “Hyundai Motor gets most improved mark.” Joins.com. August 15, 2006. PUBLIC PRESENTATIONS “Using Customer Satisfaction and Brand Loyalty Big Data Metrics for Beating the Markets and Index Creation.” Presented at Quantitative Work Alliance for Applied Finance, Education and Wisdom (QWAFAFEW), New York, New York. November, 2017. “Customer Satisfaction.” Presented at the Lansing Regional HUG Event, Lansing, Michigan. November, 2017 [with Tomas Hult] “The American Customer Satisfaction Index: History, Lessons, and Benefits.” Presented at the Honduras CSI Launch Event, Tegucigalpa, Honduras. May, 2017. “Customer Satisfaction in the Telecommunications Industries.” Presented at the CIV Breakfast Forum, Bogota, Colombia. September, 2015. “The American Customer Satisfaction Index.” Presented to Hexagon, Inc., Delhi, India. August, 2015. [A five-day series of lectures on the ACSI] 20 Case 2:17-cv-02664-DSF-MRW Document 77-16 Filed 03/05/18 Page 23 of 31 Page ID #:1676 “An Overview of the American Customer Satisfaction Index.” Presented at the DNA- SACSI Launch Event. Jeddah, Saudi Arabia. March, 2015. “The American Customer Satisfaction Index.” Presented to Faktor Plus, Inc., Belgrade, Serbia. January, 2015. [A five-day series of lectures on the ACSI] "Customer Satisfaction Measurement for Process Improvement and Profitability." Presented at the BIBF Customer Satisfaction Workshop, Manama, Bahrain. April, 2014. "Citizen Satisfaction with the U.S. Federal Government: A Review of 2013 Results from ACSI." Presented at the 2014 Customer Satisfaction Forum, Federal Consulting Group, Washington, D.C. April, 2014. "American Customer Satisfaction Index: Satisfaction and Performance." Presented at the 2014 Service Hero Awards Ceremony, Kuwait City, Kuwait. February, 2014. “An Overview of the American Customer Satisfaction Index Project.” Presented to the Vietnam Productivity Center, Hanoi, Vietnam. December, 2013. "Citizen Satisfaction: Public Sector and Performance Measurement." Presented to the Chamber of Commerce of Puerto Rico, San Juan, Puerto Rico. September, 2013. "Customer Satisfaction: A Key Element for an Effective Business Strategy." Presented to the Asociación de Ejecutivos de Ventas y Mercadeo de PR (SME), San Juan, Puerto Rico. September, 2013. "The American Customer Satisfaction Index: An Overview." Presented to Korean Productivity Center, Seoul, South Korea. April, 2013. [A two-day series of lectures on the ACSI] “The American Customer Satisfaction Index.” Presented to Alfavia Inc., Lima, Peru. March, 2013. [A five-day series of lectures on the ACSI] "Citizen Satisfaction with the U.S. Federal Government: A Review of 2012 Results from ACSI." Presented at the 2013 Customer Satisfaction Forum, Federal Consulting Group, Washington, D.C. January, 2013. “The American Customer Satisfaction Index.” Presented to the Vietnam Productivity Center, Hanoi, Vietnam. January, 2013. [A four-day series of lectures on the ACSI] "The American Customer Satisfaction Index: Satisfaction and Performance." Presented at the 5th International Conference of the Bahrain Quality Society, Manama, Bahrain. December, 2012. [Keynote Speaker] 21 Case 2:17-cv-02664-DSF-MRW Document 77-16 Filed 03/05/18 Page 24 of 31 Page ID #:1677 "Customer Satisfaction: Private Sector, Public Sector, and Performance Management." Presented at the 5th International Conference of the Bahrain Quality Society, Manama, Bahrain. December, 2012. "Guest Satisfaction Trends in the US Lodging Industry: Key Insights from the American Customer Satisfaction Index (ACSI)." Presented at the International Hotel, Motel & Restaurant Show, N.Y., N.Y. November, 2012. “The American Customer Satisfaction Index: Satisfaction, Profitability, Competitiveness.” Presented at the Colegio de Estudios Superiores de Administración, Bogota, Colombia. May, 2012. “The American Customer Satisfaction Index: An Introduction.” Presented to the Malaysian Productivity Corporation, Kuala Lumpur, Malaysia. February, 2012. “Citizen Satisfaction with the U.S. Federal Government: A Review of 2011 Results from ACSI.” Presented at the 2012 Customer Satisfaction Forum, Federal Consulting Group, Washington, D.C. January, 2012. “Citizen Satisfaction with Government: ACSI Theory, Models and Methods.” Presented at the Universidad Iberoamericana, Mexico City, Mexico. November, 2011. “Low Risk/High Returns: Financial Returns on Customer Satisfaction.” Presented to the Alternative Investment Group, University of Michigan, Ann Arbor, MI. September, 2011. “Does Interview Mode Matter? Comparing Consumer Satisfaction Results across Internet and RDD Telephone Samples.” Presented at the 66th Annual American Association for Public Opinion Research Conference, Phoenix, AZ. May, 2011. “The American Customer Satisfaction Index: An Introduction.” Presented at Mars- Indonesia, Jakarta, Indonesia. May, 2011. “Satisfaction with U.S. Federal Government – 2010 Results from the American Customer Satisfaction Index.” Presented at the 2011 Customer Satisfaction Forum, Federal Consulting Group, Washington, D.C. January, 2011. th “Citizen Satisfaction Measurement in the United States.” Presented at the 19 Annual Quality Congress, Turkish Society for Quality, Istanbul, Turkey. November, 2010. “Cross-National Customer Satisfaction: Research and Findings from the ACSI.” Presented at the 19th Annual Quality Congress, Turkish Society for Quality, Istanbul, Turkey. November, 2010. 22 Case 2:17-cv-02664-DSF-MRW Document 77-16 Filed 03/05/18 Page 25 of 31 Page ID #:1678 “Performance Measurement and Citizen Satisfaction: Findings from the U.S. and Applications for Global E-Government.” Presented at Reinventing Government for a Return to Prosperity: North American Bridge to Romania and Eastern Europe, East Lansing, MI. May, 2010. “Panel: E-Government.” Chair and Discussant, at the Midwest Political Science Association Conference, Chicago, IL. April, 2010. “Do They All Perform Alike? A Cross-Agency Examination of Determinants of Citizen Satisfaction, Trust and Confidence with U.S. Federal Agencies.” Paper presented at the Midwest Political Science Association Conference, Chicago, IL. April, 2010. “Satisfaction with U.S. Federal Government – 2009 Results from ACSI.” Presented at the 2010 Customer Satisfaction Forum, Federal Consulting Group, Washington, D.C. January, 2010. “Overview of the American Customer Satisfaction Index.” Presented to the National Initiative for Service Excellence, Bridgetown, Barbados. November, 2009. “Panel discussion: Global customer satisfaction indices.” At the ISES Global Conference on Service Excellence, Singapore. July, 2009. “The American Customer Satisfaction Index: Results and Lessons Learned.” Presented at the ISES Global Conference on Service Excellence, Singapore. July, 2009. “The 2008 Contact Center Satisfaction Index.” Presented at the 2009 National Conference on Operations and Fulfillment, Las Vegas, Nevada. March, 2009. “Satisfaction with U.S. Federal Government – Results from ACSI.” Presented at the 2008 Customer Satisfaction Forum, Federal Consulting Group, Washington, D.C. December, 2008. “The American Customer Satisfaction Index – The Public Sector Model.” American Evaluation Association Annual Conference. Denver, Colorado. November, 2008. “Customer Satisfaction – Measurement and Managerial Applications: Lessons from the American Customer Satisfaction Index.” Presented at the seminar Customer Satisfaction Measurement. Jakarta, Indonesia. August, 2008. “Determinants of Website Satisfaction and Loyalty: Comparing E-Business and U.S. Federal E- Government Models.” 8th European Conference on e-Government, Lausanne, Switzerland. July, 2008. “Satisfaction with the U.S. Federal Government.” Presented to the Workforce Development Agency (WDA), Singapore. March, 2008. 23 Case 2:17-cv-02664-DSF-MRW Document 77-16 Filed 03/05/18 Page 26 of 31 Page ID #:1679 “The American Customer Satisfaction Index – A Roundtable Event.” Presented to the Institute for Service Excellence, Singapore Management University, Singapore. February, 2008. “Customer Satisfaction with U.S. Federal Government – Results of the ACSI.” Presented at the 2007 Customer Satisfaction Forum, Federal Consulting Group, Washington, D.C. December, 2007. “Citizen Satisfaction in the United States – Methods and Findings of the ACSI.” Presented at the 16th Annual Quality Congress, Turkish Society for Quality, Istanbul, Turkey. November, 2007. “The American Customer Satisfaction Index.” Presented at Tianjin University, Tianjin, China. September, 2007. [A four-day series of lectures on the ACSI to a group of faculty and Ph.D. students] “The American Customer Satisfaction Index.” Presented at the Customer Index Value launch in Bogota, Colombia. August, 2007. “Workshop: Identifying Key Elements in Measuring Government Satisfaction.” Presented at the Universidad Iberoamericana, Mexico City, Mexico. March, 2007. “Customer Satisfaction with the U.S. Federal Government – Methods and Findings of the ACSI.” Presented at the Universidad Iberoamericana, Mexico City, Mexico. March, 2007. “Findings of the 2006 American Customer Satisfaction Index.” Presented at the Interagency Customer Service Forum, Federal Consulting Group, Washington, D.C. December, 2006. “ACSI Overview: Methods, Modeling and Findings.” Presented at a Meeting of the Turkish Society for Quality, Istanbul, Turkey. April, 2006. “Findings of the 2005 American Customer Satisfaction Index.” Presented at the Interagency Customer Service Forum, Federal Consulting Group, Washington, D.C. December, 2005. “Citizen Satisfaction with the U.S. Federal Government.” Presented to the Office of Public Service Reform, Whitehall, London, U.K. June, 2005. “Key Findings for the 2003 American Customer Satisfaction Index.” Presented at the Interagency Customer Service Forum, Federal Consulting Group, Washington, D.C. December, 2003. 24 Case 2:17-cv-02664-DSF-MRW Document 77-16 Filed 03/05/18 Page 27 of 31 Page ID #:1680 EDUCATION Ph.D. Political Science, University of Pittsburgh, 2005 Major Fields: Political Theory, Public Administration Minor Fields: Comparative Politics, European Union Dissertation: Reconciling Democracy and Bureaucracy: Towards a Deliberative- Democratic Theory of Bureaucratic Accountability Dissertation Committee: Iris Young (University of Chicago), Frederick Whelan, B. Guy Peters, Michael Goodhart M.A. Political Science, University of Pittsburgh, 1999 “High Pass with Distinction” B.A. Western Michigan University, 1996 Major: Political Science Minor: Philosophy Magna cum Laude Other University of Michigan Inter-University Consortium on Political and Social Research (ICPSR, 2002) Summer Language Institute (German Language Study, 2000) 25 Case 2:17-cv-02664-DSF-MRW Document 77-16 Filed 03/05/18 Page 28 of 31 Page ID #:1681 EXHIBIT 2 References “Cable TV Prices Keep Going Up as More People Cut the Cord,” Associated Press. Jaunary 5, 2018. Aydin, S., Özer, G. and Ö. Arasil (2005). “Customer Loyalty and the Effect of Switching Costs as a Moderator Variable: A Case in the Turkish Mobile Phone Market,” Marketing Intelligence & Planning, 23(1), 89-103. Balasubramanian, S.K. and C.A. Cole (2002). “Consumers’ Search and Use of Nutrition Information: The Challenge and Promise of the Nutrition Labeling and Education Act,” Journal of Marketing, 66, 112-127. Chebat, J.C., M. Davidow, and I. Codjovi (2005). “Silent Voices: Why Some Dissatisfied Consumers Fail to Complain.” Journal of Service Research, 7(4), 328-342. Cole, C.A. and S.K. Balasubramanian (1993). “Age Differences in Consumers' Search for Information: Public Policy Implications,” Journal of Consumer Research, 20(1), 157-169. Davidow, M. and P.A. Dacin (1997)."Understanding and Influencing Consumer Complaint Behavior: Improving Organizational Complaint Management," in NA - Advances in Consumer Research Volume 24, eds. Merrie Brucks and Deborah J. MacInnis, Provo, UT: Association for Consumer Research. Dickson, P.R. and A.G. Sawyer (1990). “The Price Knowledge and Search of Supermarket Shoppers,” Journal of Marketing, 54, 42-53. Downton, S. (2002). “Measurements to Achieve Customer Focus,” HHhttp://www. downtonconsulting.com/HHarticles/Customers/measurements. Folkes, V. and S. Matta (2004). “The Effect of Package Shape on Consumers’ Judgments of Product Volume: Attention as a Mental Contaminant,” Journal of Consumer Research, 31, 391- 401. Fornell, C. and N.M. Davidow (1980). "Economic Constraints on Consumer Complaining Behavior," in NA - Advances in Consumer Research, Volume 07, eds. Jerry C. Olson, Ann Abor, MI: Association for Consumer Research. Fornell, C. and R.A. Westbrook (1984). “The Vicious Circle of Consumer Complaints,” Journal of Marketing, 48(3), 68-78. Hirschman, A.O. (1970). Exit, Voice, and Loyalty: Responses to Decline in Firms, Organizations, and States. Harvard University Press: Boston, MA. 26 Case 2:17-cv-02664-DSF-MRW Document 77-16 Filed 03/05/18 Page 29 of 31 Page ID #:1682 Lee, J., Lee, J and L. Feick (2001). “The Impact of Switching Costs on the Customer Satisfaction-Loyalty Link: Mobile Phone Service in France,” Journal of Services Marketing, 15(1), 35-48. Raghubir, P. and A.V. Krishna (1999). “Vital Dimensions in Volume Perception: Can the Eye Fool the Stomach?” Journal of Marketing Research, 36, 313-326. Wilkins, S., Beckenuyte, C. and M.M. Butt (2016). “Consumers’ Behavioural Intentions after Experiencing Deception or Cognitive Dissonance Caused by Deceptive Packaging, Package Downsizing or Slack Filling,” European Journal of Marketing, 50(1/2), 213-235. Williams, T.D., Drake, M.F. and J.D. Morgan (1993). “Complaint Behavior, Price Paid and the Store Patronized,” International Journal of Retail & Distribution Management, 21(5). 27 Case 2:17-cv-02664-DSF-MRW Document 77-16 Filed 03/05/18 Page 30 of 31 Page ID #:1683 Exhibit 3 Economic Industry Complaint Rate (2017) Subscription TV (Cable & Satellite) 37% Internet Service Providers 35% Fixed-Line Telephone Service 27% Police (City) 22% Automobiles & Light Vehicles 19% Wireless Telephone Service 18% U.S. Postal Service 17% Commercial Airlines 16% Commercial Banking 15% Express Delivery Services 15% Cellular Telephones 15% Investor-Owned Utilities 13% Garbage Pickup (City) 13% Cooperative Utilities 12% Hotels 12% Police (Suburban) 12% Health Insurance 11% Major Appliances 11% Retail 11% Brokerage (Online) 10% Credit Unions 9% Online Travel Websites 9% Athletic Shoes 8% Supermarkets 8% Health & Personal Care Stores 8% Life Insurance 8% Property & Casualty Insurance 8% Municipal Utilities 8% Hospitals 8% Limited Service Restaurants 8% Personal Computers 8% Garbage Pickup (Suburban) 8% Specialty Retail Stores 7% Apparel (Clothing) 6% Department & Discount Stores 6% Computer Software 6% Ambulatory Care 6% TV/VCR/DVD (Consumer Electronics) 6% Breweries-Beer 5% 28 Case 2:17-cv-02664-DSF-MRW Document 77-16 Filed 03/05/18 Page 31 of 31 Page ID #:1684 Beverages-Soft Drinks 5% Gasoline Stations 5% Full Service Restaurants 5% Portals & Search Engines (E- Business) 4% Food Manufacturing 3% News and Information (E-Business) 2% Personal Care & Cleaning Products 1% Social Media (E-Business) 1% 29 Case 2:17-cv-02664-DSF-MRW Document 77-17 Filed 03/05/18 Page 1 of 2 Page ID #:1685 1 CLARKSON LAW FIRM, P.C. Ryan J. Clarkson (SBN 257074) 2 [email protected] Shireen M. Clarkson (SBN 237882) 3 [email protected] Bahar Sodaify (SBN 289730) 4 [email protected] 9255 Sunset Blvd., Ste. 804 5 Los Angeles, CA 90069 Tel: (213) 788-4050 6 Fax: (213) 788-4070 7 Attorneys for Plaintiff Ketrina Gordon 8 IN THE UNITED STATES DISTRICT COURT 9 FOR THE CENTRAL DISTRICT OF CALIFORNIA 10 11 KETRINA GORDON, individually and ) Case No. 2:17-cv-02664-DSF-MRW on behalf of all others similarly ) 12 situated, ) [CLASS ACTION] ) ,P.C. 13 Plaintiff, ) DECLARATION OF JUSTIN IRM ) LENZO PH.D. IN SUPPORT OF F 14 vs. ) PLAINTIFF’S MOTION FOR AW AW L ) CLASS CERTIFICATION eles, CA 90069 g 15 TOOTSIE ROLL INDUSTRIES, INC., ) and DOES 1 through 10, inclusive, ) LARKSON 16 ) Los An C Defendants. ) 9255 Sunset Blvd., Suite 804 Suite Blvd., 9255 Sunset 17 ) ) 18 ) ) 19 ) ) 20 ) ) 21 ) ) 22 ) 23 24 25 26 27 28 DECLARATION OF JUSTIN LENZO, PH.D. Case 2:17-cv-02664-DSF-MRW Document 77-17 Filed 03/05/18 Page 2 of 2 Page ID #:1686 1 DECLARATION OF JUSTIN LENZO, PH.D. 2 I, JUSTIN LENZO, declare as follows: 3 1. I am an econometric and statistical analysis expert retained for the 4 above-mentioned case. I have personal knowledge of the facts set forth in this 5 declaration and, if called as a witness, I could and would testify competently thereto. 6 Attached hereto as Exhibit A is my curriculum vitae. 7 2. I make this declaration in support of Plaintiff’s motion for class 8 certification. Attached hereto as Exhibit B is my expert report co-authored with Dr. 9 Michael Bechtel containing my opinions regarding the products at issue. 10 11 I declare under penalty of perjury under the laws of the United States and the 12 State of California that the foregoing is true and correct. Executed on March ______3rd ,P.C. IRM F 13 2018 at Chicago, Illinois. CA 90069 , AW AW L eles 14 g 15 LARKSON Los An C 9255 Sunset Blvd., Suite 804 Suite Blvd., Sunset 9255 16 Justin Lenzo, Ph.D. 17 18 19 20 21 22 23 24 25 26 27 28 1 DECLARATION OF JUSTIN LENZO, PH.D. Case 2:17-cv-02664-DSF-MRW Document 77-18 Filed 03/05/18 Page 1 of 3 Page ID #:1687 EXHIBIT A Case 2:17-cv-02664-DSF-MRW Document 77-18 Filed 03/05/18 Page 2 of 3 Page ID #:1688 Exhibit A N ~IGANT Justin Lenzo, Ph.D. Director & Principal 150 N. Riverside Plaza Suite 2100 Chicago, IL 60606 Direct: 312.583.6943 [email protected] Education Ph.D. in Economics, Boston University A.B., Georgetown University Work History Director & Principal, Navigant Economics 2014 – Present Visiting Assistant Professor of Management and Strategy, 2013 – 2014 Kellogg School of Management at Northwestern University Assistant Professor of Management and Strategy, 2006 – 2013 Kellogg School of Management at Northwestern University Lecturer in Economics, Boston University 2004 – 2006 Economics Research Analyst, Federal Trade Commission 2000 – 2001 Selected Publications and Working Papers “O'Bannon v. NCAA: No Slam Dunks,” American Bar Association Section of Litigation, Expert Witnesses, Practice Points, August 29, 2014. “Hospital-Level Variation in Use of Cardiovascular Testing for Adults With Incident Heart Failure,” with Steve Farmer et al. JACC: Cardiovascular Imaging, v.7, n.7 (2014), pp.690- 700. “Competition and Complementary Activities: Lessons from Radiological Diagnosis and Treatment,” mimeo, Northwestern University, 2011. 1 Case 2:17-cv-02664-DSF-MRW Document 77-18 Filed 03/05/18 Page 3 of 3 Page ID #:1689 Exhibit A N ~IGANT “Market Structure and Profit Complementarity: The Case of SPECT and PET,” mimeo, Northwestern University, 2011.” “Correlated Equilibrium in Evolutionary Models with Subpopulations,” with Todd Sarver, Games and Economic Behavior, v.56, n.2 (2006), pp.271-284. Expert Testimony February 15, 2018 – Declaration of Justin Lenzo, Ph.D. in Support of Plaintiff’s Opposition to Defendants’ Motion for Partial Summary Judgement in Ojmar U.S., LLC, vs Security People, Inc., and Asil Gokcebay, in the United States District Court for the Northern District of California, Case No. 4:16-cv-4948-HSG. September 18, 2017 – Declaration of Justin Lenzo, Ph.D., in Exide Technologies, v. California Department of Public Health, in the Superior Court of the State of California for the County of Contra Costa, Case No. N16-0737. July 19, 2017 – Expert Report of Dr. Justin Lenzo, in Ojmar U.S., LLC, vs Security People, Inc., and Asil Gokcebay, in the United States District Court for the Northern District of California, Case No. 4:16-cv-4948-HSG. September 19, 2016 – Declaration of Justin Lenzo, Ph.D., in Support of Petition for Writ of Mandate Pursuant to the California Constitution and the California Public Records Act, Case No. N16-0737. October 7, 2016 – Declaration of Justin Lenzo, Ph.D., in Reply to Opposition to Petition for Writ of Mandate, Case No. N16-0737. Computer Skills Programming languages (proficient): C, R, Matlab/Octave, SQL, Perl, Ruby, LaTeX Programming languages (working knowledge): C++, SAS, Visual Basic Selected platforms and application knowledge: Unix/Linux, MS Excel, Stata, Maxima March 2018 2 Case 2:17-cv-02664-DSF-MRW Document 77-19 Filed 03/05/18 Page 1 of 78 Page ID #:1690 EXHIBIT B Case 2:17-cv-02664-DSF-MRW Document 77-19 Filed 03/05/18 Page 2 of 78 Page ID #:1691 IN THE UNITED STATES DISTRICT COURT FOR THE CENTRAL DISTRICT OF CALIFORNIA KETRINA GORDON, individually and ) Case No. 2:17-cv-02664-DSF-MRW on behalf of all others similarly situated, ) ) [CLASS ACTION] Plaintiff, ) ) EXPERT REPORT OF DR. vs. ) MICHAEL BECHTEL AND DR. ) JUSTIN LENZO TOOTSIE ROLL INDUSTRIES, INC., ) and DOES 1 through 10, inclusive, ) ) Defendants. ) ) ) ) ) ) ) ) ) ) ) ) ) Case 2:17-cv-02664-DSF-MRW Document 77-19 Filed 03/05/18 Page 3 of 78 Page ID #:1692 Table of Contents I. Introduction ...... 1 A. Dr. Bechtel’s Qualifications ...... 1 B. Dr. Lenzo’s Qualifications ...... 2 C. Assignment ...... 3 II. Background on Case, Parties, and Relevant Industry ...... 4 A. Background on Tootsie Roll Industries, Inc...... 4 B. Understanding of the Case ...... 4 C. Summary of Opinions ...... 5 D. Background on the Packaged Confectionary Industry ...... 6 III. Overview of Damages Methodology ...... 11 A. Deception and Economic Harm to Consumers ...... 11 B. Economic Concepts Related to Damages Analysis ...... 15 C. Methodology for Estimation of Damages Due to the Price Premium Attributable to Slack-Fill ...... 20 D. Overview of Conjoint Survey Methodology...... 24 IV. Conjoint Design and Implementation ...... 29 A. Boxed Candy Conjoint Survey Design ...... 29 B. Survey Instrument and Sampling Frame ...... 33 C. Survey Vendor: YouGov ...... 34 V. Survey Results ...... 36 A. Basic Descriptive Statistics for Consumption Behavior ...... 36 B. Consumers’ Expectations Regarding Fill-Level ...... 40 1. Fill Expectations Based on Information Printed on the Packaging ...... 40 2. Fill Expectations Based on Separately Presented Net Weight Information ...... 43 C. Conjoint Survey Analysis ...... 45 D. Revealed Fill Conjoint Results ...... 47 E. Box Size and Net Weight Conjoint Results ...... 49 F. Box Size Conjoint Results ...... 50 G. Price Sensitivity ...... 52 H. Homogeneity of the Effects of Candy Attributes ...... 54 I. Willingness-to-Pay Estimates ...... 55 VI. Damages Estimates ...... 57 Case 2:17-cv-02664-DSF-MRW Document 77-19 Filed 03/05/18 Page 4 of 78 Page ID #:1693 A. Regressions and Demand Parameter Estimates ...... 58 B. Price Premium Attributable to the Deception Relative to the Reveal Counterfactual ...... 60 C. Price Premium Attributable to the Deception Relative to the Adjust Counterfactual ...... 62 D. Economic Harm Due to Non-Functional Slack-Fill ...... 63 Case 2:17-cv-02664-DSF-MRW Document 77-19 Filed 03/05/18 Page 5 of 78 Page ID #:1694 I. INTRODUCTION A. Dr. Bechtel’s Qualifications 1. Dr. Michael M. Bechtel is an Associate Professor of Political Science at Washington University in St. Louis and a Research Fellow at the Swiss Institute for International Economics and Applied Economic Research. His business address is Washington University in St. Louis, CB 1063, One Brookings Drive, St. Louis, MO, 63130. 2. Dr. Bechtel holds a Master of Arts degree in Political Science (minors: Economics, Public Law, and Philosophy, University of Freiburg/Germany, 2005), a Ph.D. in Political Science (summa cum laude, University of Konstanz/Germany, 2008), and a Habilitation in Political Science (ETH Zurich, 2012). Prior to joining Washington University, he was an Assistant Professor of Political Science at the University of St. Gallen/Switzerland (2012-2016), and Senior Researcher at ETH Zurich/Switzerland (2008-2012). 3. In his academic work, Dr. Bechtel develops and applies survey methods, experimental designs, and causal inference techniques to study individual preferences over economic and environmental policy. He has designed, programmed, and fielded large-scale, representative surveys in the United States, France, Germany, Greece, Italy, Spain, Switzerland, and the United Kingdom. Many of these surveys included conjoint and other survey-experimental designs. His work has been published in leading journals such as the American Journal of Political Science, Journal of Politics, Journal of Experimental Political Science, Proceedings of the National Academy of Sciences, and other scientific outlets. He has won several academic awards and has attracted research grants from various funding agencies. 4. Dr. Bechtel has 15 years of undergraduate and graduate teaching experience. This includes courses on research design and statistical analysis. He serves as advisor and co-advisor for graduate students in political science and economics. 5. Dr. Bechtel’s professional qualifications are detailed in his curriculum vitae, which is attached as Exhibit A to his declaration filed along with this report. Navigant Economics has billed for Dr. Bechtel’s time on this engagement at $750 per hour. He has been assisted 1 Case 2:17-cv-02664-DSF-MRW Document 77-19 Filed 03/05/18 Page 6 of 78 Page ID #:1695 by others at Navigant Economics who work at his direction. Neither Navigant’s fees nor Dr. Bechtel’s compensation is contingent on the outcome of this litigation. 6. Dr. Bechtel’s scope of responsibility in this report pertains to the design of the candy consumer survey, overseeing the survey vendor’s execution of the survey, and the analysis of the survey data. B. Dr. Lenzo’s Qualifications 7. Dr. Justin Lenzo is a Director and Principal at Navigant Economics. Navigant Economics is an economics and finance consulting firm that provides economic expertise for litigation, regulatory proceedings, policy debates, and business strategy. His business address is 150 North Riverside Plaza, Suite 2100, Chicago, IL, 60606. 8. Dr. Lenzo received a Ph.D. in Economics from Boston University in 2007. He was an Assistant Professor of Management and Strategy at the Kellogg School of Management at Northwestern University from 2006 to 2013 and a Visiting Assistant Professor there from 2013 to 2014. Concurrent with his graduate studies at Boston University, he served as a Lecturer in the Economics Department from 2004 to 2006. He served as an Economics Research Analyst for the Antitrust I Division of the Bureau of Economics at the Federal Trade Commission from 2000 to 2001. 9. At Northwestern University, Dr. Lenzo taught a strategy course in the full-time and part- time Master of Business Administration (MBA) programs. He also taught an applied econometrics course in the full-time MBA program and in the Master of Sciences in Management Studies (MSMS) program. He also co-taught a Ph.D. econometrics course in the Managerial Economics and Strategy (MECS) program. At Boston University, Dr. Lenzo taught undergraduate economics courses in statistics, antitrust, industrial organization, public policy, and economic history. He has also published scholarly articles in leading academic, peer-reviewed journals. 10. Much of Dr. Lenzo’s academic and consulting work in the last sixteen years has pertained to the economic analysis of firms and industries. His consulting work has included economic analysis for litigation, regulatory disputes, class certification proceedings, merger analyses, and advisory matters. He has developed sophisticated economic analyses 2 Case 2:17-cv-02664-DSF-MRW Document 77-19 Filed 03/05/18 Page 7 of 78 Page ID #:1696 on competition issues, market demand and supply, policy effects, consumer harm, and damages. He has worked on matters across a wide array of industries, including consumer products, healthcare, telecommunications, and electrical utilities. 11. Dr. Lenzo’s professional qualifications are detailed in his curriculum vitae, which is attached as Exhibit A to his declaration filed along with this report. Navigant Economics has billed for Dr. Lenzo’s time on this engagement at $630 per hour. He has been assisted by others at Navigant Economics who work at his direction. Neither Navigant’s fees nor Dr. Lenzo’s compensation is contingent on the outcome of this litigation. 12. Dr. Lenzo is primarily responsible for the economic analysis of damages from the alleged bad acts. Dr. Lenzo also assisted Dr. Bechtel in designing the survey described in this report and in analyzing the survey results. C. Assignment 13. We were retained by Clarkson Law Firm, P.C. on behalf of the Plaintiff, Ketrina Gordon. We have been asked to provide expert opinions and analysis related to damages to consumers related to the allegations brought by the Plaintiff against the Defendant, Tootsie Roll Industries, Inc. (“Tootsie Roll”). 14. In the course of conducting our analyses, we have reviewed legal filings, as well as documents and data that we and Navigant staff have gathered from external sources. Navigant staff worked at our direction and we reviewed and confirmed their work before including the findings from any such work in this report. A list of materials which we considered is attached as Exhibit I.1 to this report. 15. We understand that discovery is ongoing, that new documents may be produced, and that some fact witness depositions may occur after filing our report. We reserve the right to supplement our report with additional and/or revised opinions if any of these documents or any testimony causes us to materially change the opinions that we offer in this report. Furthermore, if the case proceeds beyond the class certification phase, we expect to conduct further analysis and reserve the right to change our opinions in light of new data gathered and analyses conducted. 3 Case 2:17-cv-02664-DSF-MRW Document 77-19 Filed 03/05/18 Page 8 of 78 Page ID #:1697 II. BACKGROUND ON CASE, PARTIES, AND RELEVANT INDUSTRY A. Background on Tootsie Roll Industries, Inc. 16. Tootsie Roll Industries, Inc., based in Chicago, Illinois,1 was founded in 1896.2 Tootsie Roll brands include Tootsie Roll, Charms Blow Pop, Sugar Babies, Charleston Chew, Junior Mints, and Andes.3 Tootsie Roll had an estimated $507 million in net confectionery sales in 2017 and was ranked by Candy Industry Magazine in 2018 as the 39th largest candy company in the world.4 B. Understanding of the Case 17. We understand that this case is brought by the Plaintiff, Ketrina Gordon, a citizen of California living in Los Angeles County, individually and on behalf of all others similarly situated, against the Defendant alleging violations of the California Consumers Legal Remedies Act, California False Advertising Law, and California Unfair Competition Law.5 18. The Plaintiff has proposed the following class: i. “All persons who purchased the Products in the State of California for personal use and not for resale during the time period February 10, 2013, through the present. Excluded from the Class are Defendants’ officers, directors, and employees, and any individual who received remuneration from Defendants in connection with that individual’s use or endorsement of the Product.”6 19. The Plaintiff alleges that customers are deceived by the Defendant because the candy boxes have “empty space in the package…for reasons that are illegitimate or unlawful” (“non- functional slack-fill”).7 1 “Contact Us,” Tootsie Roll Industries, at http://tootsie.com/contact/. 2 Tootsie Roll Industries, at http://www.tootsie.com/. 3 Tootsie Roll Industries, at http://www.tootsie.com/. 4 “Global Top 100,” Candy Industry, 2017, Part 3, at https://www.candyindustry.com/2017-Global-Top-100-Part-3. The Candy Industry Magazine uses a combination of manufacturer surveys, annual reports, media reports, private and published research, and analysts interviews to produce estimates. 5 Second Amended Complaint, Ketrina Gordon et al. v. Tootsie Roll Industries, Inc. et al., In the United States District Court for the Central District of California, Case No. 2:17-cv-02664-DSF-MRW, August 21, 2017 (hereafter, Complaint), p.1, ¶¶4, 8. 6 Complaint, ¶108. 7 Complaint, ¶ 17. 4 Case 2:17-cv-02664-DSF-MRW Document 77-19 Filed 03/05/18 Page 9 of 78 Page ID #:1698 C. Summary of Opinions 20. We assess whether candy consumers in California are deceived by the packaging practices of the Defendant and quantify the resulting economic damages. Our methodology rests on a thought experiment that asks how purchasing behavior would react to either removing misperceptions about the relative fill of the box or to eliminating the non-functional slack- fill in the products at issue by adjusting the size of the box. 21. Based on standard economic theory, we establish that modifying a product’s real or perceived attributes such as the quantity of candy contained in the box may affect consumer willingness-to-pay for the product. To the extent that consumers overestimate the extent to which candy boxes are filled, non-functional slack-fill generates a price premium for the product. This means that the Defendant would not be able to sell a given quantity at a price that exceeds the price at which it would have been able to sell that quantity without the non-functional slack-fill. 22. We conduct a large-scale survey (N=3,788) among individuals in California, most of whom have consumed boxed candy in the past four years to empirically investigate whether fill and box size have a causal impact on candy consumers’ willingness-to-buy and the extent to which candy consumers have accurate expectations of the relative fill-level of candy boxes. 23. Our results suggest that candy consumers do not expect candy boxes to be filled completely. Consumers on average expect a fill of 67 percent. At the same time, a large share of candy consumers has fill expectations that exceed the candy’s actual fill as alleged in the complaints. When showing respondents a box of candy, three out of four consumers expect a fill-level that exceeds the box’s actual fill-level. Experimental findings also suggest that making information about the amount of candy in the box salient does not cause consumers to hold more accurate fill-level expectations. 24. We explore the sensitivity of consumers to fill and box size in a randomized conjoint experiment. The conjoint design is an established method to estimate how product features affect the willingness-to-buy and to quantify consumer damage. 25. The conjoint-experimental results document that consumers prefer candy that have higher fill-levels even when other product attributes such as price or amount are fully specified 5 Case 2:17-cv-02664-DSF-MRW Document 77-19 Filed 03/05/18 Page 10 of 78 Page ID #:1699 and kept constant. An implication of this finding is that informing consumers about that a box of candy is less than full at the point of sale would reduce the willingness-to-buy. 26. We also find that, smaller candy boxes, which would be required to increase the fill-level if amount was kept constant, also reduce the willingness-to-buy. The sensitivities to fill- level and box size are quite similar across sociodemographic subgroups. 27. We find that consumers are harmed similarly by the inclusion of non-functional slack-fill. While consumers may have heterogeneous expectations regarding fill level and may value an incremental amount of candy heterogeneously, the existence of some consumers that overestimate the fill level of the box is enough to affect overall market demand for the product. Therefore, the inclusion of slack-fill in the product generates a price premium attributable to slack-fill that is embedded in the price of the product that all class members have paid. 28. The price premium attributable to slack-fill can be estimated by simulating market demand for the product when the deception is removed, either by revealing the level of actual fill to consumers or by shrinking the box so that it does not exhibit non-functional slack-fill. We show that price premia attributable to non-functional slack-fill can be reliably estimated for the products at issue. We estimate a price premium attributable to non- functional slack-fill for each product at issue as a function of the market price. This percentage price premium can therefore be multiplied by revenues from the sale of each product at issue to class members to arrive at an estimate of class-wide damages. 29. For the Retail sales channel, we estimate price premia of 26.0 percent for Junior Mints and 21.5 percent for Sugar Babies. For the Movie Theater channel, we estimate 16.4 percent for Junior Mints and 13.4 percent for Sugar Babies. D. Background on the Packaged Confectionary Industry 30. Confectionery, commonly known as candy, is often consumed as a snack food and is widely enjoyed by people across the globe. Euromonitor International, a well-renowned market research firm, forecasted that in 2018 over 5.5 billion pounds of candy would be 6 Case 2:17-cv-02664-DSF-MRW Document 77-19 Filed 03/05/18 Page 11 of 78 Page ID #:1700 sold in the United States alone.8 Sales grew over 11 percent between 2012 and 2017, making candy into a $33.8 billion industry in 2017.9 Despite the growing consumer trend toward healthier eating and potentially stricter government regulations on sugar, domestic candy sales are forecasted to continue growth in the next five years, topping $35 billion by 2022.10 31. Industry analysts have segmented candy into categories including “sugar confectionery” and “chocolate confectionery.” Sugar confectionery refers to a wide variety of packaged products that use sugar as the principal ingredient in their production but manipulate the sugar differently to achieve special textural effects. 11 These products are further divided into mints, boiled sweets, pastilles, gums, jellies and chews, toffees, caramels, nougat, medicated confectionery, lollipops, liquorice, and other sugar confectionery.12 Chocolate confectionery refers to confectionery based primarily on chocolate and is sold as, among other forms, chocolate pouches and bags, chocolate with toys, boxed assortments, countlines, seasonal chocolate, tablets, and other chocolate confectionery.13 32. The packaging for candy comes in several different forms. Candy packaging can be made of materials such as metal, rigid plastic, flexible plastic, paper, and aluminum foil, and their shapes include trays, containers, pouches, blister and strip packs, tins, jars, and cartons.14 At times, the same candy is sold in multiple types of packaging. For example, Junior Mints, shown in Figure 1, columns A and B, produced by Tootsie Roll, are sold in boxes and pouches of varying materials and shapes. Additionally, some designs, like the image in 8 Euromonitor International, “Chocolate Confectionery in the US,” November 2017 (hereafter, Euromonitor - Chocolate Confectionery in the US), Table 27. 9 Euromonitor - Chocolate Confectionery in the US, Table 20, Table 18. 10 Euromonitor - Chocolate Confectionery in the US, Table 28. 11 Food and Agriculture Organization of the United Nations, “Sugar confectionery,” at http://www.fao.org/WAIRDOCS/X5434E/X5434E0A.HTM; and Norman N. Potter and Joseph H. Hotchkiss, “Confectionery and Chocolate Products,” Food Science, Springer, Boston, 1995 (hereafter, Potter and Hotchkiss), at https://link.springer.com/chapter/10.1007/978-1-4615-4985-7_20. 12 Euromonitor International, “Sugar Confectionery in the US,” November 2017 (hereafter, Euromonitor - Sugar Confectionery in the US), Table 1. 13 Euromonitor - Chocolate Confectionery in the US, Table 1. 14 Euromonitor International, “Packaging - Packaged Food 2012” spreadsheet, tab “Packaging by Type,” March 5, 2012. 7 Case 2:17-cv-02664-DSF-MRW Document 77-19 Filed 03/05/18 Page 12 of 78 Page ID #:1701 column C in Figure 1 below, allow consumers to see what the candy looks like without opening the packaging by incorporating a “see-thru” window or using transparent material.15 Other packaging designs, such as the “theater box” design featured in the image in column A below, are entirely opaque. With such packaging users cannot assess by sight the portion of the package that is filled with candy. Figure 1: Candy Packaging Examples A B C Note: Images retrieved from Google Images. 33. Although packaged candy is distributed to consumers through a variety of channels, an overwhelming majority of confectionery, 96.3 percent of the confectionery market value in 2017, as measured by Euromonitor International, is sold through store-based retailing.16 Within store-based retailing, grocery retailers consisted of 63.5 percent of retail market value; non-grocery specialists, such as health and beauty specialist retailers, consisted of 13.2 percent; and mixed retailers consisted of 19.6 percent.17 If the confectionary market 15 “Packaged Facts: 5 Key Trends Shaping Food and Beverage Packaging,” MarketResearch.com, September 15, 2015, at https://www.prnewswire.com/news-releases/packaged-facts-5-key-trends-shaping-food-and-beverage- packaging-300142771.html. 16 Euromonitor - Chocolate Confectionery in the US, Table 26. Market value is based on retail selling prices, which are defined by Euromonitor as “sales at end price to consumer, including retailer and wholesaler mark-ups and sales tax (except in the US and Canada) and excise taxes.” “Frequently asked questions,” Euromonitor International, at http://www.euromonitor.com/frequently-asked-questions. 17 Euromonitor - Chocolate Confectionery in the US, Table 26. Mixed retailers are defined as “retail outlets with a primary focus on selling a range of non-food/drink/tobacco merchandise across several categories.” They 8 Case 2:17-cv-02664-DSF-MRW Document 77-19 Filed 03/05/18 Page 13 of 78 Page ID #:1702 is broken down into sugar confectionery and chocolate confectionery, this allocation is roughly the same for each sub-market. From 2013 to 2017, over 95 percent of market value, as measured by Euromonitor, for both sugar confectionery and chocolate confectionery sales came from store-based retailing channels.18 Within store-based retailing, over 60 percent were distributed through grocery retailers, with hypermarkets, supermarkets, and forecourt retailers as leading channels.19 Although we were unable to find a comparison between retail and non-retail distribution channels within California, the total sales of candy and gum sold through multi-outlet and convenience stores in the 52 weeks ending January 28, 2018 exceeded $2.1 billion, demonstrating that retail stores are a significant distribution channel in California’s candy market.20 34. The chocolate confectionery segment is dominated by a few large companies. The Hershey Co. (“Hershey”) and Mars Wrigley Confectionery (“Mars”)21 accounted for approximately 64 percent of all sales in the U.S. between 2013 and 2017, while the segment shares of each include department stores, variety stores, mass merchandisers, and warehouse clubs. Euromonitor International, “Packaged Food 2018” spreadsheet, tab “Channel Definitions.” 18 See Euromonitor - Chocolate Confectionery in the US, Table 8; Euromonitor - Sugar Confectionery in the US, Table 8. 19 Euromonitor - Chocolate Confectionery in the US, Table 8; Euromonitor - Sugar Confectionery in the US, Table 8. Hypermarkets are chained or independent retail outlets with a selling space of over 2,500 square meters and with a primary focus on selling food/beverages/tobacco and other groceries. Supermarkets are similar to hypermarkets but smaller with a selling space of between 400 and 2,500 square meters. Forecourt retailers are an aggregation of chained grocery retail outlets that sell a variety of groceries from a gas/petrol station forecourt and fit several of the following characteristics: extended opening hours, selling area of less than 400 square meters, location in residential neighborhood, and include two or more product categories such as audio-visual goods, take-away food, newspapers or magazines, and greeting cards. Euromonitor International, “Packaged Food 2018” spreadsheet, tab “Channel Definitions.” 20 IRI Spreadsheet, National Confectioners Association Monthly Report: Period Ending Jan 28, 2018, tab “NCA_California – MULO+CStore.” Multi-outlet stores comprise of food/grocery stores excluding Whole Foods, Trader Joe’s and Aldi; drug stores; “mass” stores; Walmart; club stores including BJ’s and Sam’s but not Costco; dollar stores including Dollar General, Family Dollar and Fred’s Dollar and excluding Dollar Tree; and military DECA including 120 commissaries. Convenience stores include a sample of about 12,500 stores. Robin Simon, “Multi-Channel Markets Available from Nielsen and IRI: xAOC and MULO,” CPG Data Insights, April 29, 2013, at http://www.cpgdatainsights.com/get-started-with-nielsen-iri/xaoc-and-mulo/. 21 In October 2016, Mars Inc. announced plans to combine its Mars Chocolate and Wrigley segments to form the Mars Wrigley Confectionery. The Euromonitor data on chocolate confectionery categorizes sales prior to 2016 under “Mars Inc” and sales in 2016 and 2017 under “Mars Wrigley Confectionery.” The Euromonitor data on sugar confectionery categorizes sales across all years under “Mars Inc.” “Mars Combines Chocolate and Wrigley Segments to Create Mars Wrigley Confectionery,” Mars Incorporated Press Release, October 6, 2016, at http://www.mars.com/global/press-center/newsroom/mars-wrigley-confectionery-announcement. 9 Case 2:17-cv-02664-DSF-MRW Document 77-19 Filed 03/05/18 Page 14 of 78 Page ID #:1703 of the next largest producers were less than five percent of all sales during the same period.22 35. Sales share in the sugar confectionery segment appears to be more disperse. Between 2013 and 2015, Hershey led with nearly 15 percent of all sales before dropping to 13 and 12 percent in 2016 and 2017, respectively, as Mars emerged as the leading player in sugar confectionery with a share of almost 14 percent, after Mars combined its Mars Chocolate and Wrigley segments in 2017.23 The next largest sugar confectionery producers, Mondelez International and Ferrara Candy Co. Inc., have consistently jointly held thirteen percent of segment sales from 2013 to 2017. 24 36. Aggregating the chocolate and sugar confectionery segments, as in Table 1, indicates that Hershey and Mars are strong suppliers in this industry. 22 See Exhibit II.1. 23 See Mars press release, “Mars Wrigley Confectionery to Base U.S. Headquarters in Hackettstown & Newark, New Jersey; Global Headquarters Remain in Chicago,” at http://www.mars.com/docs/default-source/Press- Releases/mars-wrigley-confectionery-us-location_press-release-12052017-(1).pdf?sfvrsn=4. 24 See Exhibit II.2. 10 Case 2:17-cv-02664-DSF-MRW Document 77-19 Filed 03/05/18 Page 15 of 78 Page ID #:1704 Table 1: Shares of Top Confectionery Owners Out of Total U.S. Confectionery Sales* National Brand Owner# 2013 2014 2015 2016 2017 Hershey Co, The 28.8% 28.9% 28.7% 28.1% 27.8% + Mars Wrigley Confectionery† 21.9% 21.9% 21.8% 22.0% 22.1% + Mondelez International Inc 2.8% 2.9% 2.9% 3.0% 3.3% Nestlé USA Inc 4.1% 3.8% 3.6% 3.2% 3.0% Ferrara Candy Co Inc 2.2% 2.3% 2.3% 2.4% 2.5% Ferrero USA Inc 1.9% 2.0% 2.1% 2.2% 2.4% Lindt & Sprüngli USA Inc 1.9% 2.1% 2.2% 2.2% 2.2% Other Private Label 2.2% 2.0% 2.0% 1.9% 1.9% Perfetti Van Melle USA Inc 1.3% 1.4% 1.6% 1.7% 1.9% Others 37.7% 37.6% 37.8% 38.3% 33.1% Source: Euromonitor International, “Packaged Foods 2018” spreadsheet, tab “Company Share NBO,” extracted January 24, 2018 (hereafter, Euromonitor Spreadsheet - Sugar Confectionery in the US ); and Euromonitor International, "Packaged Foods 2018" spreadsheet, tab "Company Share NBO," extracted January 30, 2018 (hereafter, Euromonitor Spreadsheet - Chocolate Confectionery in the US ). Note: * Confectionery refers to sugar confectionery combined with chocolate confectionery. # National Brand Owner is defined by Euromonitor as the national producer, meaning that the producer owns the brand or holds the license for the brand, or the producer is the distributor of the brand. Euromonitor Spreadsheet - Chocolate Confectionery in the US , tab "Brand Definitions." † The Euromonitor dataset for chocolate confectionery includes "Mars Wrigley Confectionery" and "Mars Inc" as separate National Brand Owners. The data for Mars Inc spans across 2008-2015, and the data for Mars Wrigley Confectionery spans across 2016-2017. Since Mars Wrigley Confectionery is now owned by Mars Inc, we used the 2013-2015 data for Mars Inc under Mars Wrigley Confectionery in this table. Additionally, the Euromonitor dataset for sugar confectionery includes "Mars Wrigley Confectionery" and "Wrigley Jr Co, William" as separate National Brand Owners. The data for Wrigley Jr Co, William spans across 2008-2016, and the data for Mars Wrigley Confectionery contains 2017. Since Wrigley Jr Co, William was merged with Mars Chocolate to form Mars Wrigley Confectionery, we also used the 2013-2016 data for Wrigley Jr Co, William under Mars Wrigley Confectionery in this table. Mars 10/6/2016. 37. There are numerous candy varieties available in the market. The individual market shares of the most popular candy brands for the past decade have never exceeded 8 percent.25 Candy companies spend significant amounts of money on advertising to attract new customers and promote their product among existing customers.26 III. OVERVIEW OF DAMAGES METHODOLOGY A. Deception and Economic Harm to Consumers 38. At the core of the Plaintiff’s complaint is an alleged deception. In particular, the Plaintiff alleges that by packaging the candy in completely opaque boxes that include more empty- space than is necessary, the Defendant creates a misperception among consumers regarding 25 See Exhibit II.3. 26 Studies have documented the importance of advertising and its effect on companies’ sales. Jason C. Patalinghug, “The Effect of Advertising and In-Store Promotions on the Demand for Chocolate,” International Journal of Economics and Finance 7, no. 10 (2015) (hereafter, Patalinghug 2015). 11 Case 2:17-cv-02664-DSF-MRW Document 77-19 Filed 03/05/18 Page 16 of 78 Page ID #:1705 the volume of candy in the box at the point of sale.27,28 The Plaintiff alleges that purchasers of the relevant products supplied by the Defendant suffer economic harm from this deception.29 39. In evaluating the Plaintiff’s claims, we examined two central questions about the market for boxed candy. First, are consumers deceived by excess space in the candy box? Second, does any such deception allow the Defendant to charge a higher price for the relevant products than they otherwise would be able to charge and still sell to all class members? 40. The first question —whether consumers are deceived—examines whether or not consumer perceptions and expectations are aligned with the degree of actual empty space in the box. While consumers cannot directly determine the volume of candy in the box by looking at the box itself at the point of sale, consumers might have information available to them that allows them to assess it more or less accurately. All of the candy boxes that we examined contained printed information on the front regarding net weight in both ounces and grams. If consumers are able to read the net weight information at the point of sale and if having this information allows them to accurately assess the extent to which the candy box is full,30 then any economic harm to consumers associated with excess empty space is limited. One of the objectives of our survey design was to identify whether the printed net weight provides enough information to consumers such that box size or further information about fill of the box does not change consumer willingness-to-pay. As we will discuss in Section V, the survey results show clearly that the net weight information does not dispel misperceptions regarding the quantity of candy contained in the box. 41. In addition to potentially having net weight information available at the point of sale, consumers might also have past experiences consuming the candy in the box packaging. 27 We use the term “volume” rather than “amount” because the latter is often associated with the net weight of the candy inside the box. As we will discuss, we factor net weight information into our analysis and find that having net weight information on the box does not fully correct consumer misperceptions. Our use of the term “volume” is not intended to convey that printing volume in standard units of measurement on the box, rather than or in addition to net weight, will correct misperceptions any more than having net weight on the box. 28 Complaint, ¶50. 29 Complaint, ¶163. 30 Consumers might not have the opportunity to read the net weight information at the point of sale. If, for example, the candy is displayed behind a counter, then a consumer may not be able to read the net weight on the box before making his or her purchase decision. 12 Case 2:17-cv-02664-DSF-MRW Document 77-19 Filed 03/05/18 Page 17 of 78 Page ID #:1706 Potentially, consumers might learn from such prior experiences about the extent of empty space in the box and remember such information at the point of new purchases. Another objective of the survey was to assess whether more experienced consumers have more accurate expectations about the quantity of candy contained in the box. The survey results presented in Section V suggest that even consumers who have purchased several or many boxes in the past tend to overestimate the extent to which boxes are filled. 42. The second question—whether the deception allows the Defendant to charge a higher price when selling to the class—examines whether effects of the deception on consumers’ willingness-to-pay have market-wide implications. Even if the deception affects willingness-to-pay differently among consumers, the aggregate effect may result in a price premium that applies to all purchasers. For example, suppose that there are two consumer types in the market for a boxed candy variety. Suppose Type 1 consumers have a high willingness-to-pay for the additional candy that they perceive to be in box beyond the actual fill and suppose that Type 2 consumers have low willingness-to-pay for this additional candy. If the presence of Type 1 consumers is enough to generate a price premium for the product, then that price premium would apply to both Type 1 and Type 2 consumers so long as both types bought the candy. While the willingness-to-pay for an incremental quantity of candy may differ, the price premium attributable to the deception that each type paid is the same. 43. One complication that arises in the damages analysis is that while consumers may not distinguish between functional and non-functional slack-fill, our understanding from discussions with counsel is that the law does make such a distinction. To the extent that some of the slack-fill in the box is deemed functional, we understand from counsel that the Defendant may not be liable for damages beyond the non-functional slack-fill. Our damages methodology is designed to take into account that not all of the slack-fill need be non-functional, in addition to taking into account the factors related to consumer information and expectations discussed above. 44. Conceptually, our methodology rests on a thought experiment regarding how the Defendant might have removed misperceptions about the volume of candy in the box or eliminated the non-functional slack-fill in the products at issue. One counterfactual 13 Case 2:17-cv-02664-DSF-MRW Document 77-19 Filed 03/05/18 Page 18 of 78 Page ID #:1707 approach the Defendant could have taken is to supply each product at issue in a smaller box that exhibits no non-functional slack-fill. Even if the remaining presence of functional slack-fill results in continued misperceptions regarding the quantity of candy in the box, it is our understanding from discussions with counsel that the Defendant may not be liable for such misperceptions based only on functional slack-fill. In our damages analysis, we call this first approach the “Adjust” counterfactual because is supposes the Defendant would adjust the size of the box to fully or nearly eliminate non-functional slack fill. A second approach, called the “Reveal” counterfactual, is where the Defendant does not change the size of the box; rather, the Defendant fully reveals the actual fill level to consumers at the point of sale to remove the deception.31 Under this approach, the Defendant removes the deception rather than actually adjusting the size of the box. 45. The counterfactuals outlined above are useful for calculating damages because they address two issues raised above that complicate the damages analysis. The Adjust counterfactual estimates price premium associated with non-functional slack-fill; however, it does not take into account the extent to which the current market price might already factor in consumer expectations of slack-fill. On the other hand, the Reveal counterfactual takes into account these consumer expectations by comparing actual price—which embeds these expectations—against the corresponding price for the but-for world where the level of slack-fill is revealed to consumers. In each approach, we estimate a price premium attributable to the deception relative to the counterfactual in question according to the method explained in the subsections to follow. We then use the minimum of the two estimated price premia as our estimate of economic harm as a percentage of the market price.32 Using the two approaches in this way makes them complementary in that the result 31 For example, the Defendant might clearly print a fill line on the exterior of the box or print other clear indications of the percentage fill. One might ask whether printing the net weight on the box serves the purpose of fully revealing the quantity of the candy. Our survey is designed to examine this question and the results, discussed in Section V, show that the net weight information is not sufficient for this purpose. 32 The total economic harm to consumers is in fact the total revenue received by the Defendant attributable to the presence of non-functional slack-fill. In the but-for world, if the Defendant were to either remove non- functional slack-fill or eliminate consumers' misperceptions about the volume of candy in the box, these are the revenues that the Defendant would not have received. Neither reducing the size of the box nor indicating its true fill level on the box would plausibly result in an increase to marginal costs. Therefore, assuming that the firm is pricing above marginal costs and that marginal costs are relatively constant, these lost revenues are in turn equivalent to lost profits. In the but-for world, a profit-maximizing firm would likely then choose the 14 Case 2:17-cv-02664-DSF-MRW Document 77-19 Filed 03/05/18 Page 19 of 78 Page ID #:1708 from the Adjust counterfactual prevents the Reveal counterfactual from estimating harm in excess of what can be attributable to the non-functional part of the slack-fill. In turn, the Reveal counterfactual prevents the Adjust counterfactual from estimating too much harm in situations where the current market price already takes into account accurate consumer beliefs about slack-fill in the product. 46. The price premium associated with each counterfactual is estimated using a similar methodology, which is covered in the discussion below. After explaining some standard principles used by economists to analyze price determination in markets in the next subsection, we will explain how these principles can be used to estimate economic harm to consumers that follows from the price premium attributable to the deception. B. Economic Concepts Related to Damages Analysis 47. To see how one can measure class-wide damages from the alleged inclusion of non- functional slack-fill in a boxed candy product, it is useful to examine standard economic concepts of demand, supply, and price determination in a market. 48. Economists typically use demand curves to capture the relationship between price and quantity demanded for a good. Demand curves are a measure of consumer willingness-to- pay for a product. Furthermore, demand curves take into account consumer heterogeneity in consumer willingness-to-pay and provide the overall demand for a product (either broadly defined product, such as “candy,” or more narrowly defined product, such as “Junior Mints”) at each price. In particular, a demand curve for a product maps the price of a product to the quantity of that product that consumers collectively would want to buy at that price.33 For example, Figure 2 illustrates a demand curve for a hypothetical candy product for which consumers would collectively demand 1.6 million boxes at the price of $1.00 and would demand 800,000 boxes at the price of $2.00. The demand curve depicted option that results in a smaller decrease in profits, which is also the option that minimizes consumer harm. Therefore, choosing the minimum of the two estimated price premia of consumer harm is consistent with the likely behavior of a rational firm. 33 Alternatively, one might see a demand curve as mapping a quantity of the product to the price at which consumers would collectively want to purchase that quantity of the product. 15 Case 2:17-cv-02664-DSF-MRW Document 77-19 Filed 03/05/18 Page 20 of 78 Page ID #:1709 in the figure has a property that economists generally ascribe to demand curves: that is, quantity demanded decreases as price increases.34 Figure 2: Demand Curve Example Price Demand [)'J 800 1.600 Quantity (1,000 boxes) 49. A change in a product’s attributes—whether real or perceived by consumers—may affect consumers’ willingness-to-pay and thereby shift and/or change the shape of the demand curve for the product. For example, a reduction in the actual or perceived amount of candy in a boxed candy product may cause fewer consumers to be willing to purchase that product at any given price. This reduction in willingness-to-pay is illustrated in Figure 3 as a downward shift of the demand curve presented by to the demand curve presented by . Under demand curve , only 1.4 million boxes would be demanded at the $1.00 price and only 100,000 boxes would be demanded at the $2.00 price. 34 The so-called Law of Demand states that, all else being equal, quantity demanded decreases as price increases and quantity demanded increases as price decreases. The Law of Demand is not without exceptions for some extreme types of goods; however, such exceptions are not relevant to the market studied here. Economists generally believe that most real-world markets exhibit the inverse relationship between price and quantity asserted by the Law of Demand. 16 Case 2:17-cv-02664-DSF-MRW Document 77-19 Filed 03/05/18 Page 21 of 78 Page ID #:1710 Figure 3: Example of Shift of the Demand Curve Price $2.00 SIOO ···... D' Demand [JO 100 800 1.400 1.600 Quantity (1 ,000 boxes) 50. The prevailing price for a product depends not only on consumer willingness-to-pay, or the demand size of the market, but also on factors from the supply side. For purposes of exposition, we describe concepts related to equilibrium price and quantity determination in the context of perfectly competitive markets. 51. While the demand curve for a product is a function of consumers’ willingness-to-pay for the product, the supply curve for the product maps prices to the quantities that the producer(s) of the product are willing to supply at those prices. In a perfectly competitive market, the price and quantity that prevail are determined by the intersection of the demand and supply curves for the good. At this intersection, the market clears, or in other words, quantity demanded equals quantity supplied. At the market clearing price, the market is in equilibrium: that is, there is neither excess supply nor excess demand for the good that would induce price or quantity adjustments by market participants. Figure 4 illustrates a supply-and=demand equilibrium for a hypothetical, competitively supplied boxed candy product. As depicted, we would expect the price of $1.50 to prevail in the market and for about 3 million units to be purchased at this price. 17 Case 2:17-cv-02664-DSF-MRW Document 77-19 Filed 03/05/18 Page 22 of 78 Page ID #:1711 Figure 4: Supply-and-Demand Equilibrium in a Perfectly Competitive Market Price Supp(v 3.000 Quantity (1,000 boxes) 52. Under a market equilibrium like the one illustrated in Figure 4, the total value created by market exchange is allocated between the set of consumers and the set of producers. The area under the demand curve and above the equilibrium price line is net benefit that consumers obtain in the market and is called consumer surplus. The area under the equilibrium price line and above the supply curve are the profits obtained by producers in the industry, often called producer surplus. Figure 5 illustrates this allocation of net benefits from exchange. Figure 5: Consumer and Producer Surplus in Perfectly Competitive Market Equilibrium Price 3.000 Quantity (1 ,000 boxes) 53. As explained above, modifying a product’s real or perceived attributes may affect consumer willingness-to-pay for the product and thereby alter the demand curve. Such 18 Case 2:17-cv-02664-DSF-MRW Document 77-19 Filed 03/05/18 Page 23 of 78 Page ID #:1712 modifications alter the distribution of net benefits from exchange. Consider a situation that may arise if consumers’ tastes for candy changed such that the demand for candy generally declined, say as a consequence of a state nutritional campaign or of advertising by producers of health-food snacks. Such demand-side changes may have the effect illustrated in Figure 6, where the demand curve shifts inward and the supply curve remains unchanged. In the figure, the shaded area represents net benefits that flowed to producers under the initial demand setting, but flow to consumers under the revised demand curve. Figure 6: Transfer of Surplus from Inward Shift in Demand Curve Price $1.50 3.000 Quantity (1,000 boxes) 54. The supply and demand figures presented above reflect perfectly competitive market conditions, where many producers supply relatively undifferentiated boxed candy products. As is commonly done in the exposition of economic concepts, we presented the above concepts in the framework of perfect competition because this framework most cleanly illustrates these concepts and because this framework serves as a benchmark for more complicated economic environments. The market for boxed candy, however, exhibits features that may reflect imperfect competition among products and firms.35 The departures form the perfectly competitive benchmark do not change the basic relationships illustrated above, however. We would still expect that inward or outward shifts in demand 35 As discussed in Section II.G, the market appears to feature strong suppliers. Furthermore, our survey results indicate that consumers appear to consume a relatively small number of distinct candy varieties. Specifically, half of the respondents in our survey reported consuming 3 or fewer candy products over the last four years, 75 percent reported consuming 5 or fewer, and 90 percent reported consuming 9 or fewer. Even after removing respondents who reported not consuming any candy, the median remained the same, third quartile increased to only 6, and the 90th percentile remained at 9. 19 Case 2:17-cv-02664-DSF-MRW Document 77-19 Filed 03/05/18 Page 24 of 78 Page ID #:1713 would have effects on product prices and would result in changes in the distribution of consumer and producer surplus. C. Methodology for Estimation of Damages Due to the Price Premium Attributable to Slack-Fill 55. We explain in this section how the presence of non-functional slack-fill causes economic harm to purchasers of the products at issue and that the economic damages are uniform across class members. For the purposes of this section, we assume that the products at issue have non-functional slack-fill and that the presence of non-functional slack-fill increases consumers’ willingness-to-pay for the relevant products for at least some consumers at the point of sale by allowing the firm to increase the size of the box without adding more candy.36 For purposes of explaining how the economic concepts apply, we begin with the Adjust counterfactual, in which the Defendant provided its product in a smaller box with no non-functional slack-fill. 56. As explained in Section III.B, an increase in willingness-to-pay is reflected as an outward shift of the demand curve for each of the relevant products and a decrease in willingness- to-pay is reflected as an inward shift. Therefore, the counterfactual demand curve—where the relevant candy box does not exhibit non-functional slack-fill—is shifted in relative to the actual demand curve—where the box contains non-functional slack-fill. It is important to note that the increased willingness-to-pay indicated by the outward shifted demand curve does not mean that consumers obtain a higher-value product when slack-fill is included in the candy box. Rather, the higher willingness-to-pay for the slack-fill box over the no- slack-fill box is driven by incorrect consumer perceptions regarding the quantity of candy in the box at the point of sale. Figure 7 illustrates the shift in the demand curve for one of the products relative to the other, with the slack-fill box demand labeled and the no- slack-fill box demand labeled . In the figure, is the price that prevails for the product with non-functional slack-fill and is the quantity sold at this price (again under the presence of slack-fill). The slack-fill price is what is paid by class members, and their purchases amount to . In the counterfactual world where the product does not contain 36 The former condition is a legal or technical question beyond the scope of our report. The latter condition is examined and established in Section V of this report. 20 Case 2:17-cv-02664-DSF-MRW Document 77-19 Filed 03/05/18 Page 25 of 78 Page ID #:1714 non-functional slack-fill, a portion of the consumers are unwilling to purchase at the slack- fill price . That is, the Defendant could not sell boxes at a price of without non- functional slack-fill in the product. The implication of this result is that the inclusion of non-functional slack-fill has generated a price premium for the product—that is, the Defendant is able to sell a given quantity ( ) at a price higher than prices at which it would have been able to sell that quantity without the non-functional slack-fill. Figure 7: Price Premium Attributable to Non-Functional Slack-Fill Price pO -.;•·••• •. I I pl ··• .. • ; ··•... •Demand :I •••••••••D I (llo slack-fill) I Quantity 57. To quantify the price premium attributable to slack-fill, we examine the following question: If the product did not contain slack-fill, by how much would the Defendant need to lower the price in order to sell just as many boxes of candy as it sold when the product contained slack-fill? This price differential is the price premium embedded into the product’s actual price that is most directly attributable to the inclusion of non-functional slack-fill in the product. Furthermore, every class member paid a price that incorporates this premium, even class members that would have been willing to consume the non-slack-fill version of the product at the slack-fill price . While consumers may be heterogenous in the sensitivity to slack-fill, they are all harmed to the same extent by the embedded price premium that the Defendant enjoys with the inclusion of slack-fill, this premium is shown as the difference between p0 and p1 in Figure 7. 58. An alternative assessment of economic harm due to slack-fill might focus on the difference in the equilibrium price that would arise without slack-fill and the actual equilibrium price under slack-fill. However, the price-premium approach described in this subsection is a 21 Case 2:17-cv-02664-DSF-MRW Document 77-19 Filed 03/05/18 Page 26 of 78 Page ID #:1715 better approach for several reasons. First, the price-premium approach better isolates the direct effect of the inclusion of non-functional slack-fill, whereas under the alternative approach, this effect is confounded by the Defendant’s re-optimization and quantity adjustments. Second, the price-premium approach fully compensates all class members for the portion of the price they paid that is attributable to the inclusion of slack-fill, whereas the alternative approach may undervalue the economic harm to those class members who would not be willing to purchase the product without slack-fill, even given the lower equilibrium price. Third, estimating differences in equilibrium prices requires detailed information about the supply side of the market, especially with regard to the cost structure of the Defendant and its competitors. It is our understanding that the Defendant has not produced information that would allow assessment of its cost structure. Fourth, our estimated price premia are computed as a percentage of the market price. These percentage premia would be applied to actual revenues (a function of the equilibrium price and quantity) for the products at issue to determine damages at the class level. The class- level damages, being a function of the actual equilibrium price and quantity, would be influenced by factors on both the demand and supply side that go into the determination of that equilibrium. 59. To explain how economic harm is computed under the price-premium approach, we start with a simplified version of the econometric specification described in Section VI and used in the actual computation. For the version of the product that includes slack-fill, we model consumers as choosing to buy the relevant product if and only if ln