Page:U.S. ex rel. Schutte v. SuperValu.pdf/15

12 that respondents’ “usual and customary” prices were their discounted ones; if so, it might have been a forgivable mistake if respondents had honestly read the phrase as referring to retail prices, not discounted prices. But the Seventh Circuit did not hold that respondents made an honest mistake; it held that, because other people might make an honest mistake, defendants’ subjective beliefs became irrelevant to their scienter. Respondents make three main arguments in support of that rule. But none is persuasive.

Respondents first focus on the inherent ambiguity of the phrase at issue here, asserting that they could not have “known” that their claims were inaccurate because they could not have “known” what the phrase “usual and customary” actually meant. The most that is possible, respondents posit, is that they took a (correct) guess.

We disagree. Although the terms, in isolation, may have been somewhat ambiguous, that ambiguity does not preclude respondents from having learned their correct meaning—or, at least, becoming aware of a substantial likelihood of the terms’ correct meaning. To illustrate why, consider a hypothetical driver who sees a road sign that says “Drive Only Reasonable Speeds.” That driver, without any more information, might have no way of knowing what speeds are reasonable and what speeds are too fast. But then assume that the same driver was informed earlier in the day by a police officer that speeds over 50 mph are unreasonable and then noticed that all the other cars around him are going only 48 mph. In that case, the driver might know that “Reasonable Speeds” are anything under 50 mph; or, at the least, he might be aware of an unjustifiably high risk that anything over 50 mph is unreasonable. Indeed, if the same police officer later pulled the driver over, we imagine that he would be hard pressed to argue that some other person might have understood the sign to allow driving at 80 mph.